APPSVILLAGE AUSTRALIA LIMITED
ABN: 50 626 544 796
ANNUAL REPORT
31 DECEMBER 2019
Contents
Corporate Directory……………………………………………………………………………………………………………………………………….1
Chairman Review……………………………………………………………………………………………………………………………………..…..2
Directors’ Report……………………………………………………………………………………………………………………………………….….4
Auditor’s Independence Declaration……………………………………………………………………………………………………..…….24
Consolidated Statement of Profit or Loss and other Comprehensive Income……………………………………………...25
Consolidated Statement of Financial Position………………………………………………………………………………………………26
Consolidated Statement of Changes in Equity……………………………………………………………………………………………..27
Consolidated Statement of Cash Flows……………………………………………………………………………………………….…….…28
Notes to the consolidated financial statements……………………………………………………………………………….….……...29
Directors’ Declaration……………………………………………………………………………………………………………….………………...54
Independent Auditor’s Report……………………………………………………………………………………………………………………..55
Additional ASX Information………………………………………………………………………………………………………………………....59
2
AppsVillage Australia Limited
Corporate Directory
31 December 2019
Directors
Yoav Ziv
Non-Executive Chairman
Leanne Graham
Non-Executive Director
Max Bluvband
Executive Director
Shahar Hajdu
Executive Director
Jonathan Hart
Non-executive Director
Company Secretary
Jonathan Hart
Registered Office
Suite 3
Level 10
23 Hunter Street
Sydney NSW 2000
Australia
Auditors (Australia)
BDO Audit (WA) Pty Ltd
Level 1, 38 Station Street
Subiaco WA 6008
Australia
Legal Advisors
Steinepreis Paganin
16 Milligan Street
Subiaco WA 6008
Australia
Share Registry
Automatic Registry Services
Level 2
267 St Georges Terrace
Perth WA 6000
Australia
Stock Exchange Listing
Australia
Exchange
ASX Code: APV
Securities
1
AppsVillage Annual Report
Chairman’s letter
Dear Shareholders,
Welcome to the inaugural annual report of AppsVillage since listing on the Australian Stock Exchange in
August 2019. It has been a milestone year for the Company and I would like to take this opportunity to thank
all shareholders for your support during this time. Financial Year 2019 was a transformational year for the
business as we made significant progress towards fulfilling our mission of becoming the go-to provider for
SMBs.
A transformational year delivering record results
AppsVillage joined the ASX following an extremely successful IPO that saw us raise AU$5 million. This gave us a
strong financial platform from which we were able to go on and deliver a number of key achievements in line
with our growth and expansion strategy. This included delivering very substantial growth in revenues along
with very strong growth in the number of paying subscribers.
Our primary focus for 2019 was to deliver solid growth across our proprietary app development platform and
demonstrate the ability of our business to scale. In order to achieve this, an in-house analytical project was
initiated to establish the highest achieving customer acquisition channels and an assessment was made into
how we could capitalise on that information. As a result, we expanded our relationship with Facebook to
enable an automatic app development process utilising the SMBs existing Instagram account. The relationship
was also then expanded even further to integrate the one-click Facebook advertising capabilities available in-
app to all customers.
This strategy proved to be extremely successful and we reached a record in paying SMBs as a result. The
growth in paying SMBs in the emerging markets was over 2000% and followed by the US with over 200%
growth during 2019.
Additionally, we rolled out our app-platform offering to a number of high-growth emerging markets including
the Philippines, India, Malaysia and multiple countries in Africa. These geographies represent markets of
strategic importance for us and initial growth has exceeded expectations.
2
Growth through strategic expansion
We are also focused on developing a suite of products to aid and propel the growth of all SMBs globally and
we further expanded our product offering to incorporate micro-loans. In doing this we are able to leverage our
large global database of ambitious CEO’s looking to grow their businesses. The launch of a microfinance
service is not only harmonious to our existing offering and business model but also allows us to further
capitalise on existing assets.
The US and Australian markets are strategically important for the Company in the launch of this offering and in
order to materially progress developments we signed partnership agreements with existing SMB loan
providers in each region. In the US, we signed agreements with Seek Capital LLC and Fundomate, Inc and in
Australia an agreement was signed with Lumi Financial Management.
Signing agreements of this nature not only allow us to test and launch this product without risk but also allows
us to begin establishing a footprint in the sector while we finalise the regulatory requirements that will enable
us to offer our own SMB loans in the future.
A strong start to 2020
We finished calendar 2019 with very strong momentum in sales growth and growth in the number of paying
SMBs on the AppsVillage platform. I am pleased to report that this momentum has continued into 2020.
Despite the challenges that have arisen from COVID-19 on global economies and SMBs, we have substantially
exceeded our reported revenue guidance and we have much confidence in the robustness of our platform to
continue to deliver strong outcomes for the remainder of the 2020 financial year.
We continue to develop valuable initiatives for our SMB customers. Subsequent to the year-end we formally
launched the micro-loan offering in the US, following successful beta testing. We also commenced the beta
testing for our Australian launch. Over the next financial year, we are focused on strengthening our
relationships with capital lenders and delivering strong revenues from sales of this offering. We are also
working on upgrading the capabilities of our core offering – the app development platform to increase its
intuitiveness and offer even further added value to SMB customers. This process has already started with the
imminent launch of our new marketplace. The marketplace is an additional online platform allowing
consumers access to the apps developed by our customers and a valuable promotional tool for the SMBs.
These initiatives are continuing to drive strong revenue and paying subscriber growth into the 2020 financial
year.
Finally, as a company we are committed to creating shareholder value through delivering continued growth
across all metrics and are streamlining our commercial application processes to ramp up delivery of our
growth strategy in order to ensure our operational and commercial targets are met. We believe the impacts
of COVID-19 make digital marketing more important than ever, so we will continue to work closely with our
customers to help them through these hard times. We also are working diligently to ensure responsible
operations in this time of uncertainty.
Yours sincerely
Yoav Ziv
Chairman
3
AppsVillage Australia Limited
Directors’ Report
31 December 2019
The Directors present their report, together with the financial statements of AppsVillage Australia Limited (“the Company” or
“AppsVillage”) and its controlled entity (“the Group”) for the financial year ended 31 December 2019.
Directors
Name
Yoav Ziv
Jonathan Hart
Leanne Graham
Max Bluvband
Shahar Hajdu
Nathan Barbarich
Moshe Cohen
Howard Digby
Peter Webse
Principal Activities
Status
Chairman and Non-Executive Director
Independent Non-Executive Director and
Company Secretary
Non-Executive Director
Executive Director and Chief Executive
Officer
Executive Director and Chief Technology
Officer since Company’s inception
Non-Executive Director
Non-Executive Director and VP of business
development
Non-Executive Director
Non-Executive Director
Appointed
23 May 2019
1 March 2019
19 May 2019
21 May 2019
3 October 2019
1 June 2018
1 June 2018
1 June 2018
1 June 2018
Resigned
-
-
-
-
-
20 May 2019
20 May 2019 for Non-
Executive Director role
15 May 2019
28 February 2019
AppsVillage Australia Limited is a software-as-a-service (‘SaaS”) company that commenced activities in 2016.
AppsVillage provides an easy and inexpensive SaaS solution that allows small-to-medium businesses to create and manage their own
mobile application as a means of connecting with their customers and growing their business.
AppsVillage’s technology has automated the design, development, maintenance and marketing of mobile apps, allowing any business
to build, preview and launch their own application without have any code writing or digital marketing knowledge.
Dividends
No dividends have been paid or declared by the Group since the beginning of the financial year. No dividends were paid for the previous
financial year.
Review of Operations
Unless otherwise stated, all figures in this report are in the Company’s presentation currency US$.
AppsVillage Australia Limited delivered in 2019, 2X on its annual revenues and contract liabilities compared to 2018, increasing its
contract liabilities over 3X compared to 2018.
AppsVillage Australia Limited delivered 6,418 paying SMBs during 2019, representing a 323% increase year over year.
Additionally, AppsVillage Australia Limited generated in 2019 an annualized recurring revenue of $926,518 and monthly recurring
revenue of $77,210, each representing 212% increase year over year.
AppsVillage Australia Limited had a loss for the year ended 31 December 2019 of $5,017,237 (2018: $1,521,102). The 2019 loss included
a non-cash share-based payment of $289,930.
The net assets of the Group have increased by $1,276,442, from $385,390 at 31 December 2018 to $1,661,832 at 31 December 2019.
As at 31 December 2019, the Group’s cash and cash equivalents increased from a balance of $453,655 at 31 December 2018 to a
balance of $2,662,198.
1
AppsVillage Australia Limited
Directors’ Report (continued)
31 December 2019
Significant changes in the state of affairs
Acquisition of AppsVillage Ltd (“AppsVillage Israel”) and ASX Listing of AppsVillage Australia Limited.
On 26 August 2019, AppsVillage Australia Limited completed the acquisition of 100% of the issued capital of AppsVillage Ltd
(AppsVillage Israel), an Israeli company which has developed a propriety Software as a Service (SaaS) cloud-based platform that
provides small-to-medium businesses with a simple and inexpensive way to develop their own branded mobile business applications
as a means of connecting with their clients and growing their revenues. The transaction between the Company and AppsVillage Israel
has been accounted for as a capital re-organisation rather than a business combination under the Australian Accounting Standards. As
such, the historical information of the Company will be presented as a continuation of the pre-existing accounting values of the Israeli
entity AppsVillage Ltd.
The terms of the transaction were as follows:
•
•
•
•
•
•
•
•
•
•
The issue of 6,875,000 shares in AppsVillage Australia post 31 December 2018 prior to the acquisition date to the founders
of the Company.
The issue of 19,950,686 ordinary shares and 3,049,314 options exercisable at AUD$0.039 to the vendors of AppsVillage Israel
prior to the acquisition date.
The issue of 25,000,000 ordinary shares at AUD$0.20 to raise AUD$5,000,000 before costs (the entire amount was raised by
the Company and all shares were issued).
The issue of 10,910,905 ordinary shares on conversion of US$2,023,577 mandatorily convertible converting loans in
AppsVillage Australia.
The issue of converting loans post 31 December 2018 by AppsVillage Australia which resulted in AUD $549,248 being raised,
a financing cost (AUD $235,392) has been recognised for the value of the 3,923,198 shares to be issued to settle the liability.
1,000 shares to be issued under the cleansing offer.
The issue of 5,000,000 options with an exercise price of AUD$0.30 and a life of 3 years to the Lead Manager.
The issue of 2,000,000 warrants with an exercise price of AUD$0.30 and a life of 2.5 years to certain past shareholders of
AppsVillage Israel.
The issue of 750,000 director options were issued to Leanne Graham, Jonathan Hart and Yoav Ziv at exercise price of AUD
$0.30 with three years exercise period.
The issue of 26,250,000 performance options with an exercise price of AUD$0.30 and a life of three years which are subject
to (refer to Note 17 for further details):
o
o
o
Tranche A Performance Options: will vest and become exercisable upon the Company achieving at least one of the
Customer Collections or ACV revenues of at least AUD $2,500,000 from sales of products and services based on the
Company’s technology, for any 12-month period after Admission and before the Performance Expiry Date.
Tranche B Performance Options: will vest and become exercisable upon the Company achieving at least one of
customer collections or ACV revenues of at least AUD $5,000,000 from total sale of products and services that are
based on the Company’s technology, for any 12-month period after Admission and before the Performance Expiry
Date; and
Tranche C Performance Options: will vest and become exercisable upon the Company achieving at least one
Customer Collections or ACV revenues of at least AUD$10,000,000 from total sales of products based and services
that are based on the Company’s technology, for any 12-month period after Admission and before the Performance
Expiry Date.
Further information on the capital reorganisation is detailed in Notes 1(b) and 2.
AppsVillage Australia was admitted to the Official List on the ASX on 23 August 2019 with Official Quotation of its securities commencing
on 27 August 2019.
2
AppsVillage Australia Limited
Directors’ Report (continued)
31 December 2019
Highlights during the year
During the year ended 31 December 2019, the Company had the following highlights:
ASX listing
AppsVillage Australia was admitted to the Official List on the ASX and securities commenced on 27 August 2019.
Since its listing and up to the date of this report, the Company has made the following material announcements:
•
16 December 2019 – capital raise of 9,998,968 ordinary shares issued at AUD$0.25.
Major Business Developments:
•
•
•
•
•
•
The Company selected to participate in Facebook’s prestigious Playground Program for fast growing and innovative Israeli
companies.
The Company Partnered with Instagram, increasing the Company’s potential customers by an estimated 100 milliom
customers globally.
The Company expanded its offering to emerging markets in Africa and APAC, eliminating the need for a credit card when
onboarding Facebook promotions.
The Company signed an agreement with Lumi to offer SMB Micro-Finance services in Australia.
The Company started a pilot in USA allowing loans between $5,000 and $50,000 to a limited number of SMBs and locations.
The Company leveraged on its growing traffic and offered one-click Microfinance services via a staged roll-out over 18 months
period subject to satisfying all relevant regulatory requirements. The Company will roll out the following services:
o Micro Loans and Credit
o Micro Savings
o Micro insurance
Events after the reporting period
Major Business Developments:
•
•
•
AppsVillage signed an agreement with a leading B2B credit risk analytics company Credit Risk Community, Inc. to integrate
its credit risk to integrate its credit risk analysis technology into the AppsVillage Capital Platform.
AppsVillage has integrated an artificial intelligence algorithm into its app development software.
Following COVID-19 situation, the Company has setup an Emergency Micro Loan program to assist SMBs with their immediate
cashflow needs to deal with the impacts of the situation.
Also on 31 January 2020, the World Health Organisation (WHO) announced a global health emergency because of a new strain of
coronavirus originating in Wuhan, China (COVID-19 outbreak) and the risks to the international community as the virus spreads globally
beyond its point of origin. Because of the rapid increase in exposure globally, on 11 March 2020, the WHO classified the COVID-19
outbreak as a pandemic.
The full impact of the COVID-19 outbreak continues to evolve at the date of this report. The Company is therefore uncertain as to the
full impact that the pandemic will have on its financial condition, liquidity, and future results of operations during 2020.
While offering unique opportunities for AppsVillage, COVID-19 also represents significant challenges for all companies globally and
AppsVillage is not different. We continue to focus on our strategy of expanding the Company’s operations and have implemented
measures to maintain low operational expenditure and mitigate the impact of COVID-19 on our activities.
Although the Company cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic
continues, it may have a material adverse effect on the Company’s results of future operations, financial position, and liquidity in fiscal
year 2020.
The Company recently announced that following the global situation, the Company has setup and Emergency Micro Loan program to
assist SMBs with their immediate cashflow needs to deal with the impacts of COVID-19 on their operations. Eligible businesses on the
AppsVillage platform will be able to access loans of up to $10,000 within 24 hours for an immediate relief of Coronavirus effect on
their business.
3
AppsVillage Australia Limited
Directors’ Report (continued)
31 December 2019
Information on Directors
Yoav Ziv
Qualifications
Experience
Interest in Shares and Options at
the date of this report
Chairman and Non-Executive Director appointed on 23 May 2019
Yoav holds an MBA from Ben Gurion University, Israel, and is a Computer Science and
Economics graduate from Tel Aviv University, Israel.
Yoav Ziv is senior vice president and the General Manager of AT&T consumer,
media and advertising for Amdocs Limited (Amdocs), a leading software and
services provider to communications and media companies. Yoav resides in New
York City. From 2015 to 2017, Yoav was the global head of the quality engineering
services business unit within Amdocs. From 2013 to 2015, Yoav was the customer
business executive responsible for the Amdocs business at a tier 1 pay T provider
in New York.
From 2010 to 2013, Yoav was VP of marketing and strategic services at Realization,
a Silicon Valley technology and consulting firm specializing in project
management technologies and practices. Prior to 2010, Yoav filled numerous roles
in Amdocs in development, product management, sales, presales and operations
management.
250,000 unlisted options expiring 27 Aug 2021
40,000 ordinary shares
Directorships held in other listed
entities (last 3 years)
Nil
Max Bluvband
Qualifications
Experience
Interest in Shares and Options at
the date of this report
Directorships held in other listed
entities (last 3 years)
Executive Director and Chief Executive Officer appointed on 21 May 2019
Bachelor of Science in Computer Science from Netanya Academic College.
Max Bluvband is the Chief Executive Officer and co-founder of AppsVillage. Max is an
entrepreneur with more than 18 years of experience and has founded multiple technology
and mobile-focused companies. In these companies, Max has led fundraising rounds from
angel investors and top-tier venture capitalists, such as Sequoia Capital, totaling more than
US$15 million (approximately A$20.2 million) in funding. Max has also led merger and
acquisition activity, sales and other strategic initiatives in his companies. Prior to co-
founding AppsVillage, Max founded and served as the Chief Executive Officer of Silent
Communication Ltd., a company that provides device and network agnostic mobile client
solutions. He led all activities with Silent Communication Ltd., including multi-million dollar
transactions with customers such as T-Mobile US (NASDAQ:TMUS), Sony (TYO:6758),
Metro PCS, Alltel, Alcatel Lucent (Euronext: ALU), France Telecom (Euronext: ORA), A1,
Ericsson (NASDAQ:ERIC), Sony Ericsson, Telecom Italia (BIT: TIT), MTS (MCX: MTSS) and
Safaricom, among others.
3,092,506 ordinary shares
1,108,457 unlisted options expiring on or before 5 years from the date of quotation (August
27, 2019) on ASX.
9,187,500 performance options
Nil
4
AppsVillage Australia Limited
Directors’ Report (continued)
31 December 2019
Information on Directors (continued)
Leanne Graham
Qualifications
Experience
Non-Executive Director appointed on 19 May 2019
N/A
With over 30 years in the software sector, Leanne has assisted technology companies with her
broad experience and SaaS expertise. In 2018, Ms. Graham was awarded the New Zealand Order
of Merit for her services to the software industry.
Interest in Shares and Options at
the date of this report
250,000 unlisted options expiring 27 August 2021
50,000 ordinary shares
Directorships held in other listed
entities (last 3 years)
BidEnergy Limited (ASX: BID)
archTIS Limited (ASX: AR9)
VPCL Limited (ASX:VPC)
Jonathan Hart
Qualifications
Experience
Independent Non-Executive Director and Company Secretary appointed on 1 March2019
Bachelor of Law and Commerce
Jonathan is currently a director of Emerge Gaming Limited (ASX:EM1), Company Secretary for
Hera-Med Limited and Mayur Resources Limited (ASX:MRL). He holds a Bachelor of Laws and
Commerce and has provided corporate advisory services and held several board positions on
various ASX listed companies over the years. His experience includes initial public offerings on
ASX (AIM and JSE), reverse takeovers, due diligence investigations, general corporate and
commercial drafting, public and private mergers and acquisitions, general corporate advice in
relation to capital raisings, Corporations Act and ASX compliance.
Interest in Shares and Options at
the date of this report
250,000 unlisted options expiring 27 August 2021
50,000 ordinary shares
Directorships held in other listed
entities (last 3 years)
Emerge Gaming Limited (ASX:EM1)
5
AppsVillage Australia Limited
Directors’ Report (continued)
31 December 2019
Information on Directors (continued)
Shahar Hajdu
Qualifications
Experience
Interest in Shares and Options at
the date of this report
Directorships held in other listed
entities (last 3 years)
Director appointed 3 October 2019 & Chief Technology Officer since Company’s inception
Bachelor of Science in Computer Science cum laude from The Technion – Israel Institute of
Technology.
Shahar Hajdu leads the research and development of AppsVillage’s SaaS platform. Over the last
26 years, Shahar has gained extensive experience in software development, in industries
ranging from communications to multimedia. Prior to co-founding AppsVillage, Shahar co-
founded and served as the Chief Technology Officer of Silent Communication Ltd., a company
that provides device and network agnostic mobile client solutions, working with mobile
network operators, device manufacturers, and value-added service providers to rapidly expand
deployment and revenue opportunities for mobile applications and services. There, Shahar
lead the technology vision across Silent Communication Ltd’s product line and worked with
top-tier customer companies including TMobile US (NASDAQ: TMUS), Sony (TYO: 6758),
MetroPCS, Alltel, Alcatel Lucent (Euronext: ALU), France Telecom (Euronext: ORA), A1, Ericsson
(NASDAQ: ERIC), Sony Ericsson, Telecom Italia (BIT: TIT), MTS (MCX: MTSS) and Safaricom
among others.
Shahar was also a senior software developer and senior engineer at Elbit Systems Ltd. (TLV:
ESLT), an international high technology company engaged in a wide range of defence,
homeland security, and commercial programs.
3,092,506 ordinary shares
1,108,457 unlisted options expiring on or before 5 years from the date of quotation on ASX
9,187,500 performance options
Nil
Nathan Barbarich
Non-Executive Director Resigned on 20 May 2019
Qualifications
Experience
BComm (Property) & BComm (Law)
Nathan started his career in Stockbroking with ABN Amro in the 1990’s and has since held
several Director and Managing Director positions in Investment Banking and Corporate
Finance leading many recognisable transactions over those nearly 20 years. Nathan has been
responsible for listing many companies onto the ASX, AIM and LSE markets and has been
Lead Manager to Capital Raisings in the many hundreds of millions of dollars. With a
particular focus on the small to mid-cap sectors Nathan has been mandated by Companies in
the Resources, Energy, Technology and Industrial sectors and has held a number of Non-
Executive Director positions across his career.
Interest in Shares and Options at
resignation date
2,958,333 shares
Directorships held in other listed
entities (last 3 years)
Nil
Moshe Cohen
Experience
Interest in Shares and Options at
resignation date
Non-Executive Director (resigned on 20 May 2019) and VP of business development
With more than 25 years of business experience, Moshe Cohen is an entrepreneur and angel
investor with high-level managerial experience in product and business development for the
web, mobile, media and consumer electronics industries. Moshe is a listed inventor of more
than 30 issued patents
4,980,336 ordinary shares
2,625,000 performance options
300,000 warrants
Directorships held in other listed
entities (last 3 years)
Nill
6
Information on Directors (continued)
Howard Digby
Non-Executive Director Resigned on 15 May 2019
Qualifications:
Experience:
BE (Mechanical, Hons)
Mr Digby started his career at IBM and has spent over 25 years managing technology related
businesses across the Asia Pacific region, of which 12 years were spent in Hong Kong. More
recently, he was with The Economist Group as Regional Managing Director. Prior to this he
held senior management roles at Adobe and Gartner where his clients included major
semiconductor players inclusive of Samsung, Hynix and TSMC. Upon returning to Perth,
Howard served as Executive Editor of WA Business News and now spends his time as an
advisor and investor, having played key roles in several M&A and reverse takeover
transactions.
Interest in Shares and Options at
resignation date:
Nill
Directorships held in other listed
entities (last 3 years):
Hear Me Out (HMO); ImExHS Limited (IME); Elsight Limited (ELS); Votriv Ltd (VOR); Cirralto
Limited (CRO); 4ds Memory Limited (4DS); Estrella Resources Limited (ESR); Omni Market
Tied Limited (OMT); Transaction Solutions International Limited (TSN)
Peter Webse
Non-Executive Director Resigned on 28 February 2019
Qualifications:
Experience:
Bachelor of Business
Mr Webse has over 25 years’ company secretarial experience and is Managing Director of
Platinum Corporate Secretariat Pty Ltd, a company specialising in providing company
secretarial, corporate governance and corporate advisory services.
Interest in Shares and Options at
resignation date:
Nill
Directorships held in other listed
entities (last 3 years):
Cynata Therapeutics Limited (CYP)
7
AppsVillage Australia Limited
Directors’ Report (continued)
31 December 2019
Meetings of Directors
Director
Status
Yoav Ziv
Leanne Graham
Max Bluvband
Jonathan Hart
Shahar Hajdu
Nathan
Barbarich
Moshe Cohen
Howard Digby
Peter Webse
Appointed May 2019
Appointed May 2019
Appointed May 2019
Appointed May 2019
Appointed October
2019
Resigned May 2019
Resigned May 2019
Resigned May 2019
Resigned
2019
February
Committee membership
Directors’ Meetings
Audit and Risk
Committee
Remuneration Committee
Number
eligible to
attend
2
2
2
2
1
-
-
-
-
Number
attended
2
2
2
2
1
-
-
-
-
Number
eligible to
attend
-
-
-
-
-
-
-
-
-
Number
attended
-
-
-
-
-
-
-
-
-
Number
eligible to
attend
-
-
-
-
-
-
-
-
-
Number
attended
-
-
-
-
-
-
-
-
-
The Board has chosen not to establish an Audit and Risk Committee and a Remuneration committee. The Board considers that due to the relatively
small size of the Company, the interests of the Company are best served by the full Board completing the functions normally delegated to an audit
committee.
The processes that the Board employs to independently verify and safeguard the integrity of its corporate reporting include:
•
•
•
reviewing and adopting the Company’s quarterly, half year and annual report prior to release to shareholders and the ASX;
overseeing the Company’s relationship with the external auditor, the external audit function generally and ensuring the external audit
engagement partner rotation is in accordance with the Corporations Code.
overseeing the adequacy of the Company’s financial risk management and internal controls.
Options
During the financial year, no options were exercised.
As at the date of this report, and the reporting date, there were 37,049,314 options on issue (2018: 29,581. Refer to Note 17) of the
financial statements for details on options issued during the financial year.
The holders of these options do not have any rights under the options to participate in any share issue of the Company or any other
entity.
Proceedings on Behalf of Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
Group, or to intervene in any proceedings to which the Group is a party, for the purpose of taking responsibility on behalf of the Group
for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Group with leave of the Court under section 237 of the
Corporations Act 2001.
8
AppsVillage Australia Limited
Directors’ Report (continued)
31 December 2019
Indemnification and Insurance of directors and officers
The Group has indemnified the Directors and Executives of the Group for costs incurred, in their capacity as a Director or Executive, for
which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Group paid a premium in respect of a contract to ensure the Directors and Executives of the Company
against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of
the liability and the amount of the premium.
Environmental Regulations
The Directors are not aware of any significant environmental issues affecting the Group or its compliance with relevant environmental
issues affecting the Group or its compliance with relevant environmental agencies or regulatory authorities.
Likely Developments and Expected Results of Operations
AppsVillage has delivered strong and continuous growth since listing on the ASX in August 2019 and this momentum has continued
into the 2020 financial year. Having completed FY2019 with 6,418 paying SMB customers utilising its app-development and marketing
platform for SMBs, the Company is confident in its ability to continue to deliver growth in FY2020.
FY2019 saw the launch of AppsVillage’s SMB loan offering, with partners in the USA (Seek Capital and Fundomate) and Australia (Lumi).
Strong traction was built during the pilot phase of its US offering and APV has ramped up its strategy to build further momentum for
this offering. APV’s SMB finance pilot phase is still ongoing in Australia and results to date have been extremely encouraging. The full
launch of this service is expected to commence in Q4 2020 and the Company expects immediate and strong traction.
As a result of the strong growth delivered to date, the Company expects to continue to deliver the following growth across its revenue
generation, paying subscribers and SMB finance offering in 2020.
Paying Subscribers
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
6,418
5,501
5,049
4,094
3,208
3,015
3,466
2,214
1,953
1,685
2,430
2,523
Jan-19
Feb-19 Mar-19 Apr-19 May-19 Jun-19
Jul-19
Aug-19 Sep-19 Oct-19 Nov-19 Dec-19
9
Monthly Recurring Revenue
$77,210
$66,221
$60,867
$48,977
$38,668 $39,882
$42,484
$33,490 $35,019
$30,043
$26,556
$22,972
Jan-19
Feb-19 Mar-19 Apr-19 May-19 Jun-19
Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19
Annualized Recurring Revenue
$926,520
$794,652
$730,404
$587,724
$464,016 $478,584
$509,808
$401,880 $420,228
$360,516
$318,672
$275,664
$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$-
$1,000,000
$900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$-
Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19
Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19
The recent outbreak of COVID-19 has presented unprecedented challenges for governments and small businesses globally. These
challenges have also provided opportunities for AppsVillage’s robust business model, particularly in relation to the initiatives like SMB
loan offerings which are expected to drive increased demand from SMBs.
AppsVillage has refined its customer acquisition strategy to focus on high margin, high revenue geographies such as the USA, the United
Kingdom and Australia in order to reduce overall marketing expenditure. The Company expects this initiative will improve customer
ROI and profitability.
At this stage, the Company does not foresee a negative impact to its operations as a result of COVID-19 and is continuing with its
strategy to grow customers and revenues.
10
AppsVillage Australia Limited
Directors’ Report (continued)
31 December 2019
Indemnification of Auditors
To the extent that is permitted by law, the Company has agreed to indemnity its auditors, BDO Perth (WA) Pty Ltd, as part of the terms
of the agreement against claims by third parties arising from their report on the financial report. No payment has been made to
indemnify BDO Perth (WA) Pty Ltd during or since the financial year.
Non-audit Services
The Company’s auditor, BDO Audit (WA) Pty Ltd, has provided US$20,160 in non-audit service and its network firm has provided $4,000
in non-audit services to the Group during the year ended 31 December 2019 (2018: nil).
Full details of their remuneration can be found within the financial statements at Note 7.
In the event that non-audit services are provided by BDO Audit (WA) Pty Ltd, the Board has established certain procedures to ensure
that the provision of non-audit services are compatible with, and do not compromise the auditor independence requirements of the
Corporations Act 2001. These procedures include:
●
non-audit services will be subject to the corporate governance procedures adopted by the Company and will be reviewed by the
Board to ensure they do not impact the integrity and objectivity of the auditor; and
●
ensuring non-audit services do not involve reviewing or auditing the auditor’s own work, acting in a management or decision-
making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.
Auditor’s Independence Declaration
The auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 27.
This report is made in accordance with a resolution of Directors.
11
AppsVillage Australia Limited
Directors’ Report (continued)
31 December 2019
Remuneration Report - Audited
The remuneration report for the year ended 31 December 2019 outlines the remuneration arrangements of the Group in accordance
with the requirements of the Corporations Act 2001 (Cth), as amended (Act) and its regulations. The information has been audited as
required by section 308(3C) of the Act.
The remuneration report is presented under the following sections:
1. Key management personnel covered in this report
2. Remuneration governance
3. Executive remuneration arrangements
4. Non-executive director fee arrangements
5. Details of remuneration
6. Additional disclosures relating to equity instruments
7.
Loans to key management personnel (KMP) and their related parties
8. Other transactions and balances with KMP and their related parties
9. Voting of Shareholdings at last year’s annual general meeting
1. Key management personnel covered in this report
Key Management Personnel (KMP) have authority and responsibility for planning, directing and controlling the major activities of the
Group. KMP comprise the directors of the Company and identified key management personnel. Compensation levels for KMP are
competitively set to attract and retain appropriately qualified and experienced directors and executives. The Board may seek
independent advice on the appropriateness of compensation packages, given trends in comparable companies both locally and
internationally and the objectives of the Group’s compensation strategy.
Key management personnel covered in this report are as follows:
Name
Yoav Ziv
Jonathan Hart
Leanne Graham
Max Bluvband
Shahar Hajdu
Nathan Barbarich
Moshe Cohen
Howard Digby
Peter Webse
Status
Non-Executive Chairman
Independent Non-Executive Director
Non-Executive Director
Executive Director and Chief Executive Officer since
Company’s inception
Executive Director and Chief Technology Officer
since Company’s inception
Non-Executive Director
Non-Executive Director and VP of business
development
Non-Executive Director
Non-Executive Director
Appointed
23 May 2019
1 March 2019
19 May 2019
21 May 2019
Resigned
-
-
-
-
3 October 2019
-
1 June 2018
1 June 2018
1 June 2018
1 June 2018
20 May 2019
20 May 2019
15 May 2019
28 February 2019
Other key management personnel
Gidi Krupnik
Moshe Cohen
Chief Financial Officer
Vice President of Business Development
1 January 2019
1 June 2018
-
-
2. Remuneration governance
The Directors believe the Company is not currently of a size nor are its affairs of such complexity as to warrant the establishment of a
separate remuneration committee. Accordingly, all matters are considered by the full Board of Directors, in accordance with a
Remuneration Committee Charter.
At this stage the Board does not consider the Group’s earnings- or earnings-related measures to be an appropriate key performance
indicator (KPI). In considering the relationship between the Group’s remuneration policy and the consequences for the Company’s
shareholder wealth, changes in share price are analysed as well as measures such as successful completion of business development
and corporate activities.
During the financial year, the Company did not engage any remuneration consultants.
12
AppsVillage Australia Limited
Directors’ Report, Remuneration Report - Audited (continued)
Below is a summary of the remuneration framework
Element
Purpose
Performance metrics
Potential value
Fixed
remuneration
(FR)
STI
LTI
Provide competitive
market salary including
superannuation and
non-monetary benefits
Nil
Alignment to long-term
business growth
Nil
Positioned at
median market
rate
Changes for FY
2019
Reviewed in line
with market
positioning
-
Please refer to Note 17
for
the performance
options requirements.
Alignment with long
term shareholders
value
-
-
Granted upon IPO
3. Executive remuneration arrangements
The compensation structures are designed to attract suitably qualified candidates, reward the achievement of strategic objectives, and
achieve the broader outcome of creation of value for shareholders. Compensation packages may include a mix of fixed compensation,
equity-based compensation, as well as employer contributions to social benefits/superannuation funds. There is no performance based
remuneration.
The compensation of the executives is subject to the approval by the Board on a case-by-case basis.
Mr Max Bluvband
Mr Max Bluvband is the Co-Founder, Executive Director/ Chief Executive Officer (CEO). In July 2016, AppsVillage Israel entered into an
executive agreement with Max Bluvband pursuant to which Mr Bluvband was appointed as the CEO.
A summary of the agreement is as follows:
(a)
(Term) Mr Bluvband’s service commenced on 1 July 2016 and continues in full force and effect until terminated in accordance
with the agreement.
(b) (Salary): Mr Bluvband is paid a gross monthly salary of NIS 37,800 and super-annuation and social benefits of NIS 7,900
(approximately US$12,700 based on prevailing exchange rates) per month pursuant to the agreement. Until 30 June 2019
Mr Bluvband was paid a gross monthly salary of NIS 15,000 and super-annuation and social benefits of NIS 7,900
(approximately US$6,400 based on prevailing exchange rates) per month pursuant to the agreement.
(Events of Termination): the agreement is terminable by either party by 90 days’ prior written notice but may be terminated
immediately by AppsVillage Israel where Mr Bluvband commits a material breach of the agreement, including continued no-
performance of his duties under the agreement.
(c)
The agreement is prepared in accordance with, and is subject to, the laws of Israel and contains terms and conditions which
are considered standard for an agreement of its nature, including those in relation to confidentiality, non-competition and
non-solicitation, confirmation of proprietary rights and other standard clauses.
Mr Shahar Hajdu
Mr Shahar Hajdu is the Co-Founder, Executive Director/Chief Technology Officer (CTO). In July 2016, AppsVillage Israel entered into
an agreement with Mr Shahar Hajdu pursuant to which Mr Hajdu was appointed as the CTO.
A summary of the agreement is as follows:
(a)
(Term) Mr Hajdu’s service commenced on 1 July 2016 and continues in full force and effect until terminated in accordance
with the agreement.
(b) (Salary): Mr Hajdu is paid a gross monthly salary of NIS 37,800 and super-annuation and social benefits of NIS 7,300
(approximately US$12,600 based on prevailing exchange rates) per month pursuant to the agreement. Until 30 June 2019
Mr Hajdu was paid a gross monthly salary of NIS 15,000 (approximately US$4,300 based on prevailing exchange rates) and
super-annuation and social benefits.
(Events of Termination): the agreement is terminable by either party by 90 days’ prior written notice but may be terminated
immediately by AppsVillage Israel where Mr Hajdu commits a material breach of the agreement, including continued no-
performance of his duties under the agreement.
(c)
13
The agreement is prepared in accordance with, and is subject to, the laws of Israel and contains terms and conditions which
are considered standard for an agreement of its nature, including those in relation to confidentiality, non-competition and
non-solicitation, confirmation of proprietary rights and other standard clauses.
Mr Moshe Cohen
Mr Moshe Cohen is Vice President of Business Development. In June 2018, AppsVillage Israel entered into an agreement with Mr
Moshe Cohen pursuant to which Mr Cohen was appointed as the Vice President of Business Development.
A summary of the agreement is as follows:
(a)
(Term) Mr Cohen’s service commenced on 1 June 2018 and continues in full force and effect until terminated in accordance
with the agreement.
(b) (Salary): Mr Cohen is paid a monthly fee of US$ 6,000 per month pursuant to the agreement.
(c)
(Events of Termination): the agreement is terminable by either party by 90 days’ prior written notice but may be terminated
immediately by AppsVillage Israel where Mr Cohen commits a material breach of the agreement, including continued no-
performance of his duties under the agreement.
The agreement is prepared in accordance with, and is subject to, the laws of Israel and contains terms and conditions which are
considered standard for an agreement of its nature, including those in relation to confidentiality, non-competition and non-solicitation,
confirmation of proprietary rights and other standard clauses.
Mr Gidi Krupnik
Mr Gidi Krupnik is Chief Financial Officer. In January 2019, AppsVillage Israel entered into an agreement with Mr Gidi Krupnik pursuant
to which Mr Krupnik was appointed as the Chief Financial Officer.
A summary of the agreement is as follows:
(a)
(Term) Mr Krupnik’s service commenced on January 1, 2019 and continues in full force and effect until terminated in
accordance with the agreement.
(b) (Salary): Mr Krupnik is paid an hourly fee of US$ 150 per hour pursuant to the agreement.
(c)
(Events of Termination): the agreement is terminable by either party by 30 days’ prior written notice but may be terminated
immediately by AppsVillage Israel where Mr Krupnik commits a material breach of the agreement, including continued no-
performance of his duties under the agreement.
The agreement is prepared in accordance with, and is subject to, the laws of Israel and contains terms and conditions which are
considered standard for an agreement of its nature, including those in relation to confidentiality, non-competition and non-solicitation,
confirmation of proprietary rights and other standard clauses.
4. Non-executive director fee arrangements
The Board policy is to remunerate non-executive directors at a level to comparable companies for time, commitment, and
responsibilities. Non-executive directors may receive performance related compensation. Directors’ fees cover all main Board activities
and membership of any committee. The Board has no established retirement or redundancy schemes in relation to non-executive
directors.
The maximum aggregate amount of fees that can be paid to non-executive directors is presently limited to an aggregate of
approximately $342,000 (A$500,000) per annum and any increase is subject to approval by shareholders. Fees for non-executive
directors are not linked to the performance of the Company. However, to align directors’ interests with shareholder interests, directors
are encouraged to hold shares in the Company.
Total fees for non-executive directors for the financial year were $71,820 (A$105,000) and cover main Board activities only. Non-
executive directors may receive additional remuneration for other services provided to the Group. All non-executive directors enter
into a service agreement with the Company in the form of a letter of appointment. The letter summarises the board policies and
terms, including remuneration, relevant to the office of director.
14
AppsVillage Australia Limited
Directors’ Report, Remuneration Report - Audited (continued)
5. Details of Remuneration
31 December 2019
Short term
salary, fees &
commissions
Super-
annuation &
social benefits
Non-
monetary
benefits
Bonus
Share-based
payments (i)
Total
Performance
based
remuneration
US$
US$
US$
US$
US$
US$
%
88,132
88,132
23,940
23,940
23,940
-
-
-
74,977
64,418
26,304
24,462
27,445
8,794
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
387,479
50,766
36,239
-
-
-
-
-
-
-
-
-
-
-
37,781
179,662
37,781
159,169
18,166
18,166
18,166
42,106
42,106
42,106
-
-
-
-
-
-
19,710
94,687
-
64,418
149,770
624,254
-
-
-
-
-
-
-
-
-
-
Executive Directors :
Max Bluvband
Shahar Hajdu
Non-Executive Directors:
Yoav Ziv
Leanne Graham
Jonathan Hart
Nathan Barbarich (ii)
Howard Digby (ii)
Peter Webse (ii)
Other KMP:
Moshe Cohen (iii)
Gidi Krupnik
Total
(i) Refer to Section 6 Additional Disclosures relating to equity instruments for further information on share-based payments
granted to directors and key management during the year.
(ii) Mr Barbarich resigned on 20 May 2019, Mr Digby resigned on 15 May 2019, and Mr Webse resigned on 28 February 2019.
They are not considered to be a KMP from these dates.
(iii) Mr Cohen resigned on 20 May 2019 from the position of Non-Executive Director, however continued to act as KMP in the
capacity of Vice President of Business Development.
15
AppsVillage Australia Limited
Directors’ Report, Remuneration Report - Audited (continued)
31 December 2018
Short term
salary, fees &
commissions
Superannuati
on & social
benefits
Non-
monetary
benefits
Bonus
Share-based
payments (i)
Total
Performance
based
remuneration
US$
US$
US$
US$
US$
US$
%
Non-Execuitve Director
Nathan Barbarich
Moshe Cohen
Howard Digby
Peter Webse
Other KMP
Max Bluvband
Shahar Hajdu
Total
-
-
23,768
-
-
50,071
50,071
123,910
-
-
-
-
-
-
-
-
-
-
16,690
14,528
31,218
27,103
-
27,103
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23,768
-
-
121,976
215,840
121,976
186,575
243,952
426,183
-
-
-
-
-
-
(i) Refer to Section 6 Additional Disclosures relating to equity instruments for further information on share-based payments
granted to directors and key management during the year.
6. Additional disclosures relating to equity instruments
9,294,238 shares were issued to KMP during the 2019 financial year (2018: nil).
The number of ordinary shares in AppsVillage Australia Limited held by KMP of the Group during the financial year are as follows:
31 December 2019
Directors
Yoav Ziv
Max Bluvband
Shahar Hajdu
Leanne Graham
Jonathan Hart
Nathan Barbarich(iii)
Howard Digby (iii)
Peter Webse(iii)
Other KMP
Gidi Krupnik
Moshe Cohen (iv)
Total
Balance at start of
the year
issued during
Shares
the year (i)
Other changes during
the year (ii)
Balance at end of the
year
-
30,000
30,000
-
-
-
-
-
-
31,943
91,943
-
3,062,506
3,062,506
-
-
208,333
-
-
-
3,260,893
9,594,238
40,000
-
-
50,000
50,000
2,750,000
-
-
-
1,687,500
4,577,500
40,000
3,092,506
3,092,506
50,000
50,000
2,958,333
-
-
-
4,980,336
14,263,681
(i) Shares issued to key management personnel as consideration for their shareholding in AppsVillage. On or about 5 June
2019, the Company entered into a share swap agreement and option swap agreement (Acquisition Agreement) with the
holders of the shares and/or options of AppsVillage. For a summary of the Acquisition Agreement please see section
8.1 of the Prospectus.
(ii) Shares acquired by Mr Ziv, Mr Hart and Ms Graham as part of the initial public offer in the Prospectus. Mr Barbarich and
Moshe Cohen received the shares as part of the 6,875,000 founder shares issued (Note 15).
(iii) Mr Barbarich resigned on 20 May 2019, Mr Digby resigned on 15 May 2019 and Mr Webse resigned on 28 February 2019.
They are not considered to be a KMP from these dates and the balance at the end of the year represents the outstanding
shares as of the date of the resignation.
(iv) Mr Cohen resigned on 20 May 2019 from the position of Non-Executive Director, however continued to act as KMP in
the capacity of Vice President of Business Development.
16
AppsVillage Australia Limited
Directors’ Report, Remuneration Report - Audited (continued)
31 December 2018
Non-Executive Directors
Nathan Barbarich
Moshe Cohen
Howard Digby
Peter Webse
Other KMP
Max Bluvband
Shahar Hajdu
Total
KMP Option Holdings
Balance at start of
the year
issued during
Shares
the year
Other changes during
the year
Balance at end of the
year
-
31,943
-
-
30,000
30,000
91,943
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31,943
-
-
30,000
30,000
91,943
The number of options over ordinary shares held by each KMP of the Group during the financial year is as follows:
31 December 2019
Balance
at start
of
the
year
Granted
as
remunera
tion
Exercised
during
the year
Options
issued
during the
year (i)
Other
changes
during
the year
(ii)
Balance at
end of the
year
Vested and
exercisable
Unvested
and
un-
exercisable
Executive Directors
Max Bluvband
Shahar Hajdu
Non-Executive Directors
Yoav Ziv
Leanne Graham
Jonathan Hart
Nathan Barbarich
Howard Digby
Peter Webse
Other KMP
Gidi Krupnik
Moshe Cohen (iii)
Total
10,753
10,753
-
-
-
-
-
-
-
-
-
-
21,506
250,000
250,000
250,000
-
-
-
-
-
750,000
-
-
-
-
-
-
-
-
-
-
-
9,187,500
9,187,500
1,097,704
1,097,704
10,295,957
10,295,957
1,108,457
1,108,457
9,187,500
9,187,500
-
-
-
-
-
-
-
-
-
-
-
-
250,000
250,000
250,000
-
-
-
250,000
250,000
250,000
-
-
-
-
-
-
-
-
-
-
2,625,000
21,000,000
-
-
2,195,408
-
2,625,000
23,966,914
-
-
2,966,914
-
2,625,000
21,000,000
(i) Refer terms and conditions of the share-based payment arrangements section below for details of remuneration options issued
during the year.
(ii) Conversion of the options upon acquisition of the subsidiary Appsvillage Israel.
(iii) Mr Cohen resigned on 20 May 2019 from the position of Non-Executive Director, however continued to act as KMP in the
capacity of Vice President of Business Development.
Options do not carry any voting or dividend rights and can only be exercised once the vesting conditions have been met, until their expiry
date.
17
AppsVillage Australia Limited
Directors’ Report, Remuneration Report - Audited (continued)
KMP Option Holdings (continued)
31 December 2018
Balance at
start of the
year
Granted as
remunerati
on
Exercised
during
the year
Options
issued
during the
year
Other
changes
during the
year
Balance at
end of the
year
Vested and
exercisable
Unvested
and
un-
exercisabl
e
Non-Executive Directors
Nathan Barbarich
Moshe Cohen
Howard Digby
Peter Webse
Other KMP
Max Bluvband
Shahar Hajdu
Total
-
-
-
-
10,753
10,753
21,506
KMP Warrants Holdings
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,753
10,753
21,506
10,753
10,753
21,506
-
-
-
-
-
-
-
The number of warrants over ordinary shares held by each KMP of the Group during the financial year is as follows:
31 December 2019
Executive Directors
Max Bluvband
Shahar Hajdu
Non-Executive Directors
Yoav Ziv
Leanne Graham
Jonathan Hart
Nathan Barbarich
Howard Digby
Peter Webse
Other KMP
Gidi Krupnik
Moshe Cohen
Total
Balance
at start
of
the
year
Granted
as
remunera
tion
Exercised
during
the year
Warrants
issued
during the
year (i)
Other
changes
during
the year
Balance at
end of the
year
Vested and
exercisable
Unvested
and
un-
exercisable
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
300,000
300,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
300,000
300,000
-
300,000
300,000
-
-
-
-
-
-
-
-
-
(i) The warrants with an exercise price of AUD$0.30 and a life of 2.5 years were issued to certain past shareholders of AppsVillage
Israel.
Warrants do not carry any voting or dividend rights and can only be exercised once the vesting conditions have been met, until their
expiry date.
18
AppsVillage Australia Limited
Directors’ Report, Remuneration Report - Audited (continued)
KMP Warrant Holdings (continued)
31 December 2018
Balance at
start of the
year
Granted as
remunerati
on
Exercised
during
the year
Warrants
issued
during the
year
Other
changes
during the
year
Balance at
end of the
year
Vested and
exercisable
Unvested
and un-
exercisabl
e
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Non-Executive Directors
Nathan Barbarich
Moshe Cohen
Howard Digby
Peter Webse
Other KMP
Max Bluvband
Shahar Hajdu
Total
Terms and conditions of the share-based payment arrangements
Directors options
Option class
Number
granted
Director Options
750,000
Grant
Date
8 August
2019
Vesting and
exercise date
27 August
2019
Expiry date
3 years from the
date of issue
Exercise
price
Value per option
at grant date
Vested %
AUD$0.30
US$0.07266
100%
250,000 Director Options to each of Mr Jonathan Hart, Mr Yoav Ziv and Ms Leanne Graham.
The full terms and conditions apply to the Director Options:
1) Each Director Option entitles the holder to subscribe for one Share upon exercise of the Option.
2) Subject to paragraph (8), the amount payable upon exercise of each Director Option will be AUD$0.30.
3) Each Director Option will expire 3 years after the date of issue (Expiry Date). An Option not exercisable before the Expiry Date
will automatically lapse on the Expiry Date.
4) The Director Options are exercisable at any time on and from the date which is 24 months from quotation of the Company’s
Shares on the ASX, provided that the Option holder remains a Director of the Company (Exercise Period).
5) The Director Options may be exercised during the Exercise Period by notice in writing to the Company in the manner specified
on the Option certificate (Note of Exercise) and payment of the Exercise Price for each Director Option being exercised in
Australian currency by electronic funds transfer or other means of payment acceptable to the Company.
19
AppsVillage Australia Limited
Directors’ Report, Remuneration Report - Audited (continued)
Terms and conditions of the share-based payment arrangements (continued)
Performance options
During the year, the following performance options were granted to Directors and other key management personnel:
Performance
rights series
Grant date
Class A
Class B
Class C
Total
8 August
2019
8 August
2019
8 August
2019
No. of
performance
options
7,000,000
7,000,000
7,000,000
21,000,000
No. of
performance
options vested
during the year
-
-
-
-
Fair value per
performance
option
Total fair value of
performance
options
Total value
yet to be
expensed
$0.0837
$585,714
$585,714
$0.0837
$585,714
$585,714
$0.0837
$585,714
$585,714
-
$1,757,142
$1,757,142
In relation to Class A, B and C performance options the Directors have assessed the probability of meeting the non-market conditions
as less than probable. Accordingly, no amount in relation to these performance options has been recognised in the Statement of
Profit or Loss and Other Comprehensive Income or in the remuneration disclosures for Directors and key management personnel.
The 21,000,000 performance options have been granted to eligible participants as defined under the Company’s performance options
and options plan (PROP). In order to remain an eligible participant, the employee or director must remain in service to the Group or
the right will lapse and not vest.
20
AppsVillage Australia Limited
Directors’ Report, Remuneration Report - Audited (continued)
Terms and conditions of the share-based payment arrangements (continued)
Performance options (continued)
The above performance options were issued to the following Directors and other key management personnel:
Class A
Class B
Class C
Total
Directors:
Max Bluvband
Shahr Hajdu
Other KMP:
Moshe Cohen
Total
3,062,500
3,062,500
875,000
7,000,000
3,062,500
3,062,500
875,000
7,000,000
-
3,062,500
3,062,500
875,000
7,000,000
-
9,187,500
9,187,500
2,625,000
21,000,000
The following terms and conditions apply to the Performance Options:
1) The performance hurdles for the performance options are based on 3 separate targets relating to the Company’s revenue
targets.
•
Tranche A Performance Options: will vest and become exercisable upon the Company achieving at least one of the
Customer Collections or ACV revenues of at least AUD $2,500,000 from sales of products and services based on the
Company’s technology, for any 12-month period after Admission and before the Performance Expiry Date.
Tranche B Performance Options: will vest and become exercisable upon the Company achieving at least one of customer
collections or ACV revenues of at least AUD $5,000,000 from total sale of products and services that are based on the
Company’s technology, for any 12-month period after Admission and before the Performance Expiry Date; and
Tranche C Performance Options: will vest and become exercisable upon the Company achieving at least one Customer
Collections or ACV revenues of at least $10,000,000 from total sales of products based and services that are based on
the Company’s technology, for any 12-month period after Admission and before the Performance Expiry Date.
•
•
2)
In order to remain an eligible participant, the employee and director must remain in services to the Group or the right will
lapse and not vest.
3) The performance options will vest on the date the milestone relating to that performance options has been satisfied. All of
the performance rights will vest and become exercisable if a change of control event occurs in relation to the Company
(whether by way of takeover bid, scheme of arrangement involving the Company which results in a change in 40% or more
of the voting shares in the Company, or the Group sells all or substantially all of its business or assets).
4) Each performance Option entitles the holder to one fully paid ordinary share upon exercise.
5) Upon:
a.
a takeover bid under Chapter 6 of the Corporations Act having been made in respect if the Company and:
i. having received acceptances for not less than 50.1% if the Company’s Shares on issue; and
ii. having been declared unconditional by the bidder; or
b. a Court granting orders approving a compromise or arrangement for the purposes or in connection with a scheme
of arrangement for the reconstruction of the Company or its amalgamation with any other company or companies,
then, to the extent Performance Options have not converted into Shares due to satisfaction of the Vesting Conditions, the
Performance Options will automatically vest and become exercisable.
6) The Performance Options are exercisable at any time on or prior to the Performance Expiry Date.
7) The Performance Options may be exercised during the Exercise Period by notice in writing to the Company in the manner
specified on the Option certificate and payment of the Performance Exercise Price for each Option being exercised in
Australian currency by electronic funds transfer or other means of payment acceptable to the Company.
21
AppsVillage Australia Limited
Directors’ Report, Remuneration Report - Audited (continued)
Terms and conditions of the share-based payment arrangements (continued)
Warrants
Option
class
Number
granted
Grant
Date
Vesting
exercise date
and
Expiry date
Exercise
price
Value per warrant
at grant date
Vested %
Warrants
300,000
8 August
2019
27 August 2019
2.5 years from
the date of issue
AUD$0.30
US$0.0657
100%
300,000 warrants issued to Moshe Cohen.
The full terms and conditions apply to the Warrants:
1) Each Warrant entitles the holder to subscribe for one Share upon exercise of the Warrant.
2) Subject to paragraph (7), the amount payable upon exercise of each Warrant will be AUD$0.30.
3) Each Warrant will expire 2.5 years after the date of issue (Expiry Date). A Warrant not exercisable before the Expiry Date will
automatically lapse on the Expiry Date.
4) The Warrants are exercisable at any time on or prior to the Expiry Date (Exercise Period).
5) The Warrants may be exercised during the Exercise Period by notice in writing to the Company in the manner specified on the
Warrant certificate (Note of Exercise) and payment of the Exercise Price for each Warrant being exercised in Australian currency
by electronic funds transfer or other means of payment acceptable by the Company.
6) A Notice of Exercise is only effective on and from the later of the date of receipt of the Notice of Exercise and the date of receipt
of the payment of the Exercise Price for each Warrant being exercised in cleared funds (Exercise Date).
7) For so long as the Warrants remain unexercised, nothing contained in these terms shall be constructed as conferring upon the
holder the right to vote or consent as a shareholder in respect of meetings or shareholders for the election of directors of the
Company, the right to receive any dividends declared by the Company or any other right as a shareholder.
7.
Loans from key management personnel (KMP) and their related parties
No loans are noted between the Group and key management personnel and their related parties for the current year (2018: Nil).
8. Other transactions and balances with KMP and their related parties
Transactions with related parties are entered into on terms equivalent to those that prevail in arm’s length transactions.
Related parties of the Group's key management personnel are as follows:
Mr Zignmund Bluvband – Executive Director and CEO Max Bluvband's Father
Mrs Hagit Bluvband – Executive Director and CEO Max Bluvband's wife
Gnat Pty Ltd – Company that controlled by Nathan Barbarich
RM Corporate - Nathan Barbarich has significant influence over the Company
Pearl Cohen Zedek Latzer Baratz – CEO’s sister Anna Moshe is a partner of this legal firm
The Group has transactions with members of the Group’s key management personnel and/or their related parties during the year as
follows:
8(a) Share holdings by KMP related parties
31 December 2019
Balance at
start of
the year
Granted as
remuneration (iii)
Conversion(i)
Other changes
during the
year(ii)
Balance at end of
the year
Moshe Cohen
Zigmund Bluvband
GNat Pty Ltd
Total
-
10,896
-
10,896
1,687,500
-
2,750,000
4,437,500
-
1,112,296
-
1,112,296
-
(673,909)
176,251
(497,658)
1,687,500
449,283
2,926,251
5,063,034
(i) Conversion upon acquisition of the subsidiary AppsVillage Israel.
22
(ii) Other changes during the year reflects on market sales / on market purchases.
(iii) Received as part of 6,875,000 shares issued to the founders of the Company prior to the IPO with unit price of
0.1353. Refer to Note 15.
8(b) Options Holdings by KMP Related Parties
31 December 2019
Balance at
start of the
year
Granted as
remuneration(i)
RM Corporate
Hagit Bluvband
Total
-
2,222
2,222
5,000,000
-
5,000,000
Conversion upon
acquisition of the
subsidiary
AppsVillage Israel
-
226,830
226,830
Balance at the
end of the year
5,000,000
229,052
5,229,052
(i) The issue of 5,000,000 options with an exercise price of AUD$0.30 and a life of 3 years to the Lead Manager of IPO.
8(c) Details of remuneration
31 December 2019
Short term salary,
fees & commissions
US$
Super-annuation &
social benefits
US$
Pearl Cohen
Legal(ii)
RM Corporation (i)
Hagit Bluvband
Total
58,127
371,511
29,120
458,758
-
-
11,094
11,094
Non-Monetary benefits
US$
-
-
12,624
12,624
Total
US$
58,127
371,511
52,838
482,476
(i) This is the fee paid to RM Corporation for IPO related service and broking capital raising completed in December
2019. The terms of the agreement is on an arm’s length basis.
(ii) This is the fee paid to Pearl Cohen Legal for legal consult service in 2019. The terms of the agreement is on an arm’s
length basis.
9. Voting of shareholders at last year’s annual general meeting
The financial year ended 31 December 2019 is the Company’s first financial year as a disclosing entity; accordingly, no remuneration
report was prepared at 31 December 2018 and no vote by shareholders was applicable.
This is the end of the audited remuneration report
This directors’ report is signed in accordance with a resolution of directors made pursuant to s.298(2) of the Corporations Act 2001.
On behalf of the Directors
Mr Max Bluvband
Chief Executive Officer
Tel Aviv, 31 March 2020
23
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY DEAN JUST TO THE DIRECTORS OF APPSVILLAGE AUSTRALIA
LIMITED
As lead auditor of AppsVillage Australia Limited for the year ended 31 December 2019, I declare that,
to the best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of AppsVillage Australia Limited and the entities it controlled during the
period.
Dean Just
Director
BDO Audit (WA) Pty Ltd
Perth, 31 March 2020
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
AppsVillage Australia Limited
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the Year Ended 31 December 2019
Revenue from contracts with customers
Operating expenses
Cost of revenues - commissions
Research and development
Selling and marketing
General and administrative
Share-based payments
Listing and registration expenses
Issue of founder shares
Loss before finance expenses
Finance income
Finance expense
Loss before income tax
Income tax expense
Loss for the year
Note
3
17
4
15
4
4
5
2019
US$
2018
US$
611,042
373,406
(59,921)
(74,371)
(547,790)
(197,261)
(2,616,218)
(1,161,926)
(542,185)
(289,930)
(634,487)
(929,952)
(162,962)
(298,258)
-
-
(5,009,441)
(1,521,372)
5,998
(13,794)
1,483
(1,213)
(5,017,237)
(1,521,102)
-
-
(5,017,237)
(1,521,102)
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Foreign currency translation reserve
16(c)
160,343
-
Total comprehensive loss for the year attributable to owners of the
Company
(4,856,894)
(1,521,102)
Loss per share attributable to owners of the Company
Basic/diluted loss per share (cents per share)
8
(0.140)
(0.076)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying
notes.
25
AppsVillage Australia Limited
Consolidated Statement of Financial Position
As at 31 December 2019
CURRENT ASSETS
Cash and cash equivalents
Restricted cash
Trade and other receivables
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Employee provisions
Contract liability
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
SHAREHOLDERS’ EQUITY
Issued capital
Mandatorily convertible bridge loans
Reserves
Accumulated losses
SHAREHOLDERS’ EQUITY
Note
9
10
11
12
13
14
15
15
16
2019
US$
2018
US$
2,662,198
28,223
138,884
2,829,305
453,655
137,278
78,055
668,988
10,116
10,116
3,754
3,754
2,839,421
672,742
736,034
93,577
347,978
1,177,589
-
1,177,589
1,661,832
177,731
3,296
106,325
287,352
-
287,352
385,390
7,967,290
304,314
-
2,023,577
952,538
298,258
(7,257,996)
(2,240,759)
1,661,832
385,390
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
26
AppsVillage Australia Limited
Consolidated Statement of Changes in Equity
As at 31 December 2019
Balance at 1 January 2018
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Mandatorily convertible bridge loans
Share based payments
Balance at 31 December 2018
Balance at 1 January 2019
Loss for the year
Other comprehensive income
Total comprehensive Income( loss) for the year
Transactions with owners in their capacity as
owners:
Issue of shares – Note 15
Capital raising costs –Note 15
Share based payments –Note 17
Conversion of convertible loan - Note 15
Transactions under capital restructure(i)
Issued Capital
Accumulated
losses
Share-based
payment reserve
US$
304,314
-
-
-
-
-
US$
(719,657)
(1,521,102)
-
(1,521,102)
-
-
304,314
(2,240,759)
US$
-
-
-
-
-
298,258
298,258
304,314
(2,240,759)
298,258
-
-
-
(5,017,237)
-
(5,017,237)
6,584,350
(944,951)
-
2,023,577
-
-
-
-
-
-
-
-
-
-
363,210
289,929
-
-
951,397
Foreign Currency
Translation
Reserve
US$
-
-
Predecessor
accounting
reserve
US$
-
-
Mandatorily
convertible bridge
loans
US$
600,000
-
-
-
-
-
-
-
-
160,343
160,343
-
-
-
-
-
160,343
-
-
-
-
-
-
-
-
-
-
-
-
-
(159,202)
(159,202)
-
-
1,423,577
-
2,023,577
2,023,577
-
-
-
-
-
-
(2,023,577)
-
-
Total
US$
184,657
(1521,102)
-
(1,521,102)
1,423,577
298,258
385,390
385,390
(5,017,237)
160,343
(4,856,894)
6,584,350
(581,741)
289,929
-
(159,202)
1,661,832
Balance at 31 December 2019
7,967,290
(7,257,996)
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
(i) As a result of the capital reorganisation transaction, an equity account called ‘Predecessor Account Reserve’ exists. This equity account represents the carrying value of the net liabilities acquired.
See Note 2 for further details of the acquisition.
27
AppsVillage Australia Limited
Consolidated Statement of Cash Flows
For the Year Ended 31 December 2019
CASH FLOWS USED IN OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Listing and registration expenses
Interest paid
Note
2019
US$
2018
US$
852,695
479,731
(2,910,460)
(1,540,623)
(634,487)
(7,796)
-
(1,206)
Net used in operating activities
9(b)
(2,700,048)
(1,062,098)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for plant and equipment
Net used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of shares
Transaction costs related to issues of shares
Investments in restricted cash
Proceeds from mandatorily convertible bridge loans
Net cash provided from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Impact of movement in foreign exchange rates
Cash and cash equivalents at the end of the financial year
9
(8,984)
(8,984)
(2,607)
(2,607)
5,103,455
(581,741)
-
371,472
4,893,186
2,184,154
453,655
24,389
2,662,198
-
-
(128,623)
1,423,577
1,294,954
230,249
223,406
(21,592)
453,655
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
28
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements
For the Year Ended 31 December 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements cover AppsVillage Australia Limited (Company) and its controlled entity (also referred to as
Group).
AppsVillage Australia Limited is a company limited by shares, incorporated and domiciled in Australia. The Group is a for-profit entity.
The nature of operations and principal activities of the Company are described in the Directors’ report.
Basis of preparation of the financial report
a)
Statement of Compliance
These financial statements are general purpose financial statements which have been prepared in accordance with Australian
Accounting Standards (AASBs) (including Australian Interpretations) adopted by the Australian Accounting Standards Board (AASB)
and the Corporations Act 2001.
Australian Accounting Standards set out accounting policies that the Australian Accounting Standards Board has concluded would
result in financial statements containing relevant and reliable information about transactions, events and conditions. Compliance with
Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting
Standards.
b)
Basis of Measurement and Reporting Conventions including Capital Re-organisation
The financial statements, except for cash flow information, have been prepared on an accruals basis and are based on historical costs,
modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.
The amounts presented in the financial statements have been rounded off to the nearest dollar unless stated otherwise.
On 26 August 2019, AppsVillage Australia Limited (APV) completed a transaction with the shareholders of AppsVillage Ltd (AppsVillage
Israel) to acquire 100% of the share capital of AppsVillage Israel in exchange for the following equity instruments in the Company;
19,950,686 shares and 3,049,314 options exercisable at AUD$0.039. In accordance with Australian Accounting Standards, the
acquisition does not meet the definition of a business combination as APV was established for the sole purpose of facilitating the listing
process to acquire AppsVillage Israel by way of an equity swap. The shareholders of AppsVillage Israel received the same proportion of
equity instruments in APV.
The financial report will represent:
•
•
•
the results of AppsVillage Israel for the period 1 January 2019 to the Acquisition Date
the results of the consolidated group from the Acquisition Date to 31 December 2019
the consolidated Groups financial position as at 31 December 2019
The comparative financial information in the financial statements will be that of AppsVillage Israel and not AppsVillage Australia Limited
(although the capital structure will be that of AppsVillage Ltd). Comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
c)
Going Concern
The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business activity and
the realisation of assets and the settlement of liabilities in the ordinary course of business. The Group incurred a loss for year ended
31 December 2019 of US$ 5,017,237 (2018: US$1,521,102) and net cash outflows from operating activities of US$2,700,048 (2018:
US$1,062,098).
Subsequent to reporting date, on 31 January 2020, the World Health Organisation (WHO) announced a global health emergency
because of a new strain of coronavirus originating in Wuhan, China (COVID-19 outbreak) and the risks to the international community
as the virus spreads globally beyond its point of origin. Because of the rapid increase in exposure globally, on 11 March 2020, the WHO
classified the COVID-19 outbreak as a pandemic. These events are having a significant negative impact on world stock markets,
currencies and general business activities. The timing and extent of the impact and recovery from COVID-19 is unknown but it may
29
have an impact on Group’s activities and potentially impact on being able to increase its revenue and/or raise capital in an uncertain
market.
In context of this operating environment, the ability of the Group to continue as a going concern is dependent on securing additional
funding through debt or equity to continue to fund its operational and marketing activities.
These conditions indicate a material uncertainty that may cast a significant doubt about the entity’s ability to continue as a going
concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.
The Directors believe that there will be sufficient funds available to continue to meet the Group’s working capital requirements as at
the date of this report and that sufficient funds will be available to finance the operations of the Group for the following reasons:
•
•
•
•
•
the Directors have assessed the likely cash flow for the 12 month period from the date of signing this financial report and its
impact on the Group and believe there will be sufficient funds to meet the Group’s working capital requirements as at the date
of this report;
the Group has recently been successful in raising equity and is planning to raise further funds;
the level of expenditure can be managed;
the Directors also have reason to believe that in addition to the cash flow currently available, additional funds from receipts are
expected through the provision of the Group’s services; and
Is continuing to explore alternative options in an effort to mitigate the possible impact of COVID-19.
Should the Group not be able to continue as a going concern, it may be required to realise its assets and discharge its liabilities other
than in the ordinary course of business, and at amounts that differ from those stated in the financial statements or raise additional
capital through equity or debts raisings and that the financial report does not include any adjustments relating to the recoverability
and classification of recorded asset amounts or liabilities that might be necessary should the Group not continue as a going concern
and meet its debts as and when they become due and payable. The directors plan to continue the Group’s operations on the basis as
outlined above and believe there will be sufficient funds for the Group to meet its obligations and liabilities for at least twelve
months from the date of this report
d)
Principles of Consideration
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2019.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the investee. Specifically, the Group controls as investee if and only if the Group
has:
•
•
•
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
Exposure, or rights, to variable returns from its involvement with the investee, and
The ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee, including:
•
•
•
The contractual arrangement with the other vote holders of the investee,
Rights arising from other contractual arrangements,
The Group’s voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more
of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases
when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during
the year are included in the statement of profit or loss and other comprehensive income from the date the Group gains control until
the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group,
and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary,
adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting
policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the
Group are eliminated in full on consolidation.
30
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
A change in ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses
control over a subsidiary, it:
•
•
•
•
•
•
•
De-recognises the assets (including goodwill) and liabilities of the subsidiary
De-recognises the carrying amount of any non-controlling interests
De-recognises the cumulative translation differences recorded in equity
Recognises the fair value of the consideration received
Recognises the fair value of any investments retained
Recognises any surplus or deficit in profit and loss
Reclassifies the parent’s share of components previously recognised in OCI to profit or loss Accumulated losses as
appropriate, as would be required if the Group had directly disposed of the related assets or liabilities.
e)
Income Tax
Current income tax expense charged to the profit or loss is tax payable on taxable income calculated using applicable income tax rates
enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected
to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in the deferred tax asset and deferred tax liability balances during the year as well
unused tax losses.
Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when the tax
relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in financial statements. Deferred tax assets also result where amounts have been fully expensed but future
tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a
business combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the rates that are expected to apply to the period when the asset is realised or the
liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner
in which management expects to recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that
future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
When temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax
assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not
probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or
simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset
where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same
taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or
simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of
deferred tax assets or liabilities are expected to be recovered or settled.
31
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
f)
Financial Instruments
Initial recognition and measurement
Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the
contractual provisions of the instrument.
Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair value
through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to profit
or loss immediately. Financial instruments are classified and measured as set out below.
Classification and subsequent measurement
(i)
Receivables
Trade receivables are measured at amortised cost using the effective interest method, less any allowance for expected credit losses.
Trade receivables are generally due for settlement within 0 - 60 days.
(ii)
Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. Gains or losses are
recognised in profit or loss though amortisation process and when the financial liability is derecognised.
Derivative instruments
The Group does not trade or hold derivatives.
Financial guarantees
The Group has no material financial guarantees.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flow expires or the asset is transferred to another
party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset.
Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The difference between
the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including
the transfer of non-cash assets or liabilities assumed, is recognised on profit or loss.
g) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits available on demand with banks with original maturity of three months or
less.
h) Trade receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest
method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 0 - 60 days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To
measure the expected credit losses, trade receivables have been grouped based on days overdue.
32
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
i)
Revenue Recognition
The Group provides an online platform that enables users to create applications using their Facebook (‘FB’) pages and generates
revenue primarily from services related to such applications.
The Group recognises revenue when the customer obtains control over the promised services. The revenue is measured according to
the amount of the consideration to which the Group expects to be entitled in exchange for the services promised to the customer,
other than amounts collected for third parties.
Identifying the contract
The Group accounts for a contract with a customer only when the following conditions are met:
(a) The parties to the contract have approved the contract (in writing, orally or according to other customer business practices)
and they are committed to satisfying the obligations attributable to them;
(b) The Group can identify the rights of each party in relation to services that will be transferred;
(c) The Group can identify the payment terms for the service that will be transferred;
(d) The contract has a commercial substance (i.e. the risk, timing and amount of the entity’s future cash flows are expected to
(e)
change as a result of the contract); and
It is probable the consideration, to which the Group is entitled to in exchange for its services transferred to customer, will be
collected.
For the purposes of paragraph (e) the Group examines, inter alia, the percentage of the advance payments received and the spread of
the contractual payments, past experience with the customer and the status and existence of sufficient collateral.
If a contract with a customer does not meet all the above criteria, consideration received from the customer is recognised as a contract
liability until the criteria are met or when one of the following events occurs; the Group has no remaining obligation to transfer services
to the customer and any considerations promised by the customer has been received and cannot be returned; or the contract has been
terminated and the consideration received from the customer cannot be refunded.
Identifying Performance Obligations
On the contract’s inception date, the Group assesses the services promised in the contract with the customer and identifies as a
performance obligation any promise to transfer to the customer one of the following:
(a) Services that are distinct; or
(b) A series of distinct services that are substantially the same and have the same pattern of transfer to the customer.
The Group identifies services promised to the customer as being distinct when the customer can benefit from the services on their own
or in conjunction with other readily available resources and the Group’s promise to transfer the services to the customer is separately
identifiable from other promises in the contract.
Determining the transaction price
The transaction price is the amount of the consideration to which the Group expects to be entitled in exchange for the services
promised to the customer, other than amounts collected for third parties.
Satisfaction of performance obligations
Revenue is recognised overtime when the Group satisfies a performance obligation by transferring control over promised services to
the customer.
33
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
i)
Revenue Recognition
Interest income
Interest income is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost
of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that
exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the
financial asset.
j)
Research and development expenses
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding,
is recognised in profit or loss when incurred.
Development activities involve a plan or design for the production of new or substantially improved products and processes.
Development expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and
commercially feasible, future economic benefits are probable, and the Group has intention and sufficient resources to complete
development and to use or sell the asset.
As of 31 December 2019, the Group does not meet the conditions to capitalise any development expenditure, therefore, all expenditure
was recognised in profit or loss as incurred.
k) Operating expenses
Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin.
l)
Depreciation
Depreciation is a systematic allocation of the depreciable amount of an asset over its useful life. The depreciable amount is the cost of
the asset, less its residual value.
An asset is depreciated from the date it is ready for use, meaning the date it reaches the location and condition required for it to
operate in the manner intended by management.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of the fixed asset item,
since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the assets.
The estimated useful lives for the current and comparative periods are as follows:
•
Computer and software
33%
Depreciation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted if appropriate.
m) Goods and Services Tax (GST)/Value Added Tax (VAT)
Revenues, expenses, and assets are recognised net of the amount of GST/VAT, except where the amount of GST/VAT incurred is not
recoverable.
Receivable and payables are stated inclusive of the amount of GST/VAT receivable or payable. The net amount of the GST/VAT
recoverable from, or payable to, the tax authorities is included with other receivables and payables in the statement of financial
position.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST/VAT component of investing and financing
activities, which are disclosed as operating cash flows.
34
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
n)
Employee Benefits
Post-employment benefits
The liability for severance pay is in accordance its obligations under Israeli employment law (Section 14 of the Severance Compensation
Act, 1963). All Israel based employees are included under Section 14, and are entitled only to monthly deposits, at a rate of 8.33% of
their monthly salary, made in the employee’s name with insurance companies or pension funds. Under Israeli employment law,
payments in accordance with Section 14 release the employer from any future severance payments.
The funds are made available to the employee at the time the employer-employee relationship is terminated, regardless of the cause
of termination. The severance pay liabilities and deposits under Section 14 are not reflected in the statements of financial position as
the severance pay risks have been irrevocably transferred to the insurance companies or pension funds.
Short term employee benefits
Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided
or upon the actual absence of the employee when the benefit is not accumulated.
The employee benefits are classified, for measurement purposes, as short-term benefits or as other long-term benefits depending on
when the Group expects the benefits to be wholly settled.
o)
Equity-settled compensation
The Group measures the share-based expense and the cost of equity-settled transaction with employees by reference to the fair value
of the equity instruments at the date at which they are granted. The fair value is determined by using the Black Scholes option valuation
model which takes into account the terms and conditions upon which the instruments are granted.
p)
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are
unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and
are usually paid within 30 days of recognition.
q)
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that
an outflow of economic benefits will result, and that outflow can be reliably measured. Provisions are measured using the best estimate
of the amounts required to settle the obligation at the end of the reporting period.
r)
Equity and reserves
Share capital represents the fair value of shares that have been issued. Any transaction costs associated with the issuing of shares are
deducted from share capital, net of any related income tax benefits. The Share-based payment reserve records the cost of share-based
payments.
s)
Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each entity within the Group is measured using the currency of the primary economic environment in which
that entity operates. The consolidated financial statements are presented in US dollars which is the subsidiary’s functional currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction.
Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost
continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at
the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the profit or loss.
35
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
s)
Foreign currency transactions and balances
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the
extent that the underlying gain or loss is recognised other comprehensive Income; otherwise the exchange difference is recognised in
profit or loss.
Group Companies
The financial results and position of foreign operations whose functional currency is different from the Group’s presentation currency
are translated as follows:
•
•
•
assets and liabilities are translated at year-end exchange rates prevailing at the reporting period;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars are recognised
in other comprehensive income and included in the foreign currency translation reserve in the statement of financial position. These
differences are recognised in the profit or loss in the period which the operation is disposed of.
t)
Segment information
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors
(the chief operating decision makers) in assessing performance and in determining the allocation of resources. The Group’s sole
operating segment is consistent with the presentation of these consolidated financial statements.
u) Share based payments
Share-based payments are measured at the fair value of goods or services received or the fair value of the equity instruments issued,
if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services
are received. The fair value of options is determined using the Black Scholes option valuation model. The number of shares and options
expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for services received
as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest.
For performance options with non-market based vesting conditions, at each reporting date, the Company revises its estimate of the
number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or
loss over the remaining vesting period, with a corresponding adjustment to the option reserve.
v) Earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing:
•
•
the profit/(loss) attributable to member of the parent entity, excluding any costs of servicing equity other than ordinary
shares
by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
ordinary shares issued during the year (if any).
Diluted earnings/(loss) per share adjusts the figures used in the determination of basic earnings/(loss) per share to take into account:
•
•
the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary shares; and
the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of
all dilutive potential ordinary shares.
w) Predecessor Accounting
Business combinations involving entities under capital reorganisation are accounted for using the predecessor accounting method.
Under this method;
•
•
Carrying values are not restated in the accounts of the acquiring entity, rather prior book values are maintained. As a result,
no fair value adjustments are recorded on the acquisition; and
The carrying value of net assets or liabilities acquired is recorded as a separate element of equity.
36
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
x)
Critical Accounting Estimates and Judgements
The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best
available current information. Estimates assume a reasonable expectation of future events and are based on current trends and
economic data, obtained both externally and within the Group.
Key Estimates and judgements
Capital Re-organisation
The acquisition of 100% of the issued capital of AppsVillage Ltd (Israel) by the Company, by way of issuing the shareholders of
AppsVillage Ltd (Israel) fully paid shares in the Company, has been determined as a capital reorganisation as the transaction does not
meet the definition of a business. Capital reorganisation transactions are a complex accounting area because there are no specific
accounting standards for these types of transactions. In the absence of specific guidance, management has used the guidance in AASB
108 Accounting Policies, Change in Accounting Estimates and Errors (para 10) whereby management has used its judgement in
developing and applying a relevant and reliable accounting policy using pre-combination book values to account for this transaction as
no substantive economic change has occurred. Refer to Note 2 for additional information.
Share based payments
The Group initially measures the cost of equity-settled transactions with employees, KMP and directors by reference to the fair value
of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires
determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant.
This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the
share option, volatility and dividend yield and making assumptions about them, as well as an assessment of the probability of achieving
non-market-based vesting conditions.
The directors also apply judgements to assess the probability and timing of achieving milestones related to the performance options.
At 31 December 2019 the Directors have assessed the probability of meeting the non-market conditions as less than probable.
Accordingly, no amount in relation to these performance rights has been recognised in the Statement of Profit or Loss and Other
Comprehensive Income or in the remuneration disclosures for Directors and key management personnel. The assumptions and models
for estimating fair value for share-based payment transactions are disclosed on Note 17.
The Directors make estimates and judgements in preparing the financial report based on historical knowledge and best available
current information. Estimates assume a reasonable expectation of future events based and are based on current trends and economic
data, obtained both externally and within the Group.
37
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 2: CAPITAL REOREGANISATION EQUITY
Summary of Acquisition
AppsVillage Australia Limited (the acquirer) was incorporated in Australia on 1 June 2018 for the purpose of identifying technology
acquisitions showing potential for growth and development. On 5 June 2019, the Company entered an agreement to acquire
AppsVillage Ltd (Israel Company) (AppsVillage).
On 26 August 2019, the Company completed a transaction with the shareholders of AppsVillage Ltd (Israel) under capital reorganisation
to acquire 100% of the share capital in AppsVillage Australia Limited in exchange for 19,950,686 ordinary shares and 3,049,314 options
exercisable at $0.0039 in the Company prior to the ASX listing.
As at the date of acquisition, the assets and liabilities of the Company were as follows:
a) Assets and Liabilities Acquisition Date
Cash and cash equivalents
Trade and other receivables
Prepayments
Intercompany loan
Fixed assets
Trade and other payables
Convertible loan
Convertible loan – finance cost
Net liabilities at acquisition date
b)
Predecessor Accounting Reserve
Net liabilities of AppsVillage Australia Limited at acquisition date
Predecessor Accounting Reserve
NOTE 3: REVENUE
2019
US$
4,207
1,476
98,922
233,053
36,711
(2,897)
(371,472)
(159,202)
(159,202)
2019
US$
(159,202)
(159,202)
The Group operates in one operating segment. In the following table sales are attributed to geographic distribution based on the
location of the customer:
Israel
United States
Other countries
Total revenue to external customers
2019
US$
18,942
305,521
286,579
611,042
2018
US$
9,246
334,058
30,102
373,406
Total revenue in both financial years are generated from provision of services that allow small-to-medium businesses to create and
manage their own mobile application as a means of connecting with their customers and growing their business. The revenue is
recognised over time in both periods.
38
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 4: EXPENSES
Loss before income tax from continuing operations includes the following specific
expenses:
Payroll and related expenses
Professional services
Depreciation of plant and equipment
Exchange rate differences
Finance expenses:
-
-
Interest income
Interest expenses
Total finance expenses
2019
US$
674,105
392,729
2,621
2018
US$
224,132
111,864
418
96,991
-
(5,998)
13,794
7,796
(1,483)
1,213
(270)
Listing and registration expenses
634,487
-
The Company incurred costs to list on ASX which include professional fees in preparing the prospectus and additional expenditure
in connection with this process. The amounts incurred represents one off costs and will not be incurred in the future.
Share based payments expense
289,929
298,258
During the period the Group undertook several share-based payment transactions which are detailed in Note 17.
NOTE 5: INCOME TAX
The financial accounts for the year ended 31 December 2019 comprise the results of AppsVillage Australia Limited and AppsVillage
Israel. The legal parent is incorporated and domiciled in Australia where the applicable tax rate is 27.5% (2018: 27.5%). The applicable
tax rate in Israel is 23% (2018: 23%).
a)
Income tax expense
Current tax
Deferred tax
2019
US$
-
-
-
b) The income tax expense for the year can be reconciled to the accounting loss as follows:
Loss for the year before tax
Tax at the Australian tax rate of 27.5%
Effect of different tax rate of group entities operating in a different jurisdiction
Effect of expenses that are not deductible in determining taxable income
Effect of unused tax losses not recognised as deferred tax assets
2019
US$
(5,017,237)
(1,379,740)
147,973
323,657
908,110
-
39
2018
US$
-
-
-
2018
US$
(1,521,102)
(418,303)
68,450
163,972
185,881
-
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 5: INCOME TAX (CONTINUED)
Tax losses
Unused tax losses for which no deferred tax asset has been recognised will be subject to the Group satisfying the requirements
imposed by regulatory taxation authorities. The benefits of deferred tax assets will only be recognised if:
-
-
-
Future assessable income is derived of a nature of an amount sufficient to enable the benefit to be realised.
The condition for deductibility imposed by tax legislation continue to be complied with; and
No changes in tax legislation adversely affect the Group in realising the benefit.
c) Deferred tax losses not recognised at reporting date
Deferred tax assets not recognised at the reporting date
Unused tax losses
NOTE 6: RELATED PARTY TRANSACTIONS
a)
Key Management Personnel Compensation
The totals of remuneration paid to KMP during the year are as follows:
Short term salary and fees
Social benefits
Non-Monetary benefits
Share based payments
Total KMP Compensation
b) Other transactions
2019
US$
2018
US$
1,358,457
450,347
2019
US$
387,479
50,766
36,239
149,770
624,254
2018
US$
123,910
31,218
27,103
243,952
426,183
Transactions with related parties are entered into on terms equivalent to those that prevail in arm’s length transactions.
Related parties of the Group's key management personnel are as follows:
Mr Zigmund Bluvband – CEO's Father
Mrs Hagit Bluvband – CEO's Wife
Gnat Pty Ltd – Company that controlled by Mr Barbarich
RM Corporate - Company that controlled by Mr Barbarich
Pearl Cohen Zedek Latzer Baratz – CEO’s sister Anna Moshe is a partner of this legal firm
The Group has transactions with members of the Group’s key management personnel and/or their related parties during the year as
follows:
b(1) Share holdings by KMP related parties
31 December 2019
Balance at
start of
the year
Granted as
remuneration (iii)
Conversion(i)
Other changes
during the
year(ii)
Balance at end of
the year
Moshe Cohen
Zigmund Bluvband
GNat Pty Ltd
Total
-
1,112,296
-
1,112,296
(i) Conversion upon acquisition of the subsidiary AppsVillage Israel.
1,687,500
-
2,750,000
4,437,500
-
10,896
-
10,896
-
(673,909)
176,251
(497,658)
1,687,500
449,283
2,926,251
5,063,034
40
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
(ii) Other changes during the year reflects on market sales / on market purchases.
(iii) Received as part of 6,875,000 shares issued to the founders of the Company prior to the IPO with unit price of 0.1353. Refer
to Note 15.
31 December 2018
Balance at
start of the
year
Granted as
remuneration
Conversion
Other changes
during the year
Balance at end of
the year
Zigmund Bluvband
Total
10,896
10,896
-
-
-
-
-
10,896
10,896
b(2) Options Holdings by KMP Related Parties
31 December 2019
Balance at
start of the
year
-
2,222
2,222
RM Corporate
Hagit Bluvband
Total
Granted as
remuneration(i)
Conversion(ii)
Balance at the
end of the year
5,000,000
-
5,000,000
-
226,830
226,830
5,000,000
229,052
5,229,052
(i) The issue of 5,000,000 options with an exercise price of AUD$0.30 and a life of 3 years to the Lead Manager.
(ii) Conversion upon acquisition of the subsidiary AppsVillage Israel.
31 December 2018
Hagit Bluvband
Total
Balance at start
of the year
2,222
2,222
Granted as
remuneration
-
-
Conversion
-
-
Balance at the
end of the year
2,222
2,222
b(3) Details of remuneration
31 December 2019
Short term salary,
fees & commissions
US$
Pearl Cohen legal(ii) 58,127
RM Corporation (i)
Hagit Bluvband
Total
371,511
29,120
458,758
Super-annuation &
social benefits
US$
-
-
11,094
11,094
Non-Monetary
benefits
-
-
12,624
12,624
Total
US$
58,127
371,511
52,838
482,476
(i) This is the fee paid to RM Corporation for IPO related service. The terms of the agreement are on an arm’s length basis.
(ii) This is the fee paid to Pearl Cohen Legal for legal consult service in 2019. The terms of the agreement are on an arm’s length
basis.
41
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
31 December 2018
Short term salary,
fees & commissions
US$
14,995
Super-annuation &
social benefits
US$
8,085
Non-Monetary
benefits
12,384
Total
US$
35,464
Hagit Bluvband
NOTE 7: AUDITOR’S REMUNERATION
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices
and non-related audit firms:
Auditor remuneration
-
-
-
Auditing and reviewing the financial reports (BDO) - Australia
Auditing and reviewing the financial reports (BDO) – Israel
Auditing and reviewing the financial reports (KPMG) – Israel
Other non-audit remuneration
-
-
Investigating Accountant’s Report (BDO) – Australia
Tax service (BDO) – Israel
NOTE 8: LOSS PER SHARE
2019
US$
29,700
30,000
-
59,700
20,160
4,000
24,160
2019
US$
2018
US$
-
-
48,000
48,000
-
-
-
2018
US$
Loss per share (EPS)
a)
Loss used in calculation of basic EPS and diluted EPS
b) Number of ordinary shares outstanding at year end used in
calculation of basic and diluted loss per share
(5,017,237)
36,293,692
(1,521,102)
19,950,686
The number of ordinary shares outstanding (the denominator of the EPS calculation) for the years ended 31 December 2019 and 31
December 2018 has been adjusted to reflect the capital reorganisation. The number of shares outstanding for the year ended 31
December 2018 is based on the number of shares outstanding in the period following the acquisition.
NOTE 9: CASH AND CASH EQUIVALENTS
Cash at bank
Total cash and cash equivalents in the statement of cash flows
2019
US$
2,662,198
2,662,198
2018
US$
453,655
453,655
42
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 9 b: RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH FLOWS FROM OPERATING ACTIVITIES:
Loss after income tax
Non-cash flows in loss after income tax
-
-
-
-
-
Non-cash currency differences expenses
Share based payment expense
Non-cash expense related to convertible loan
Depreciation and amortisation
Expenses related to issue of founder shares
Changes in assets and liabilities
-
-
-
-
(Increase) in trade and other receivables
Increase in trade and other payables
Increase in contract Liability
Increase/(decrease) in provisions
Cash flow used in operating activities
2019
US$
2018
US$
(5,017,237)
(1,521,102)
106,077
289,930
159,202
2,621
929,952
(60,829)
558,303
241,405
90,529
(2,700,048)
-
298,258
-
-
-
(46,864)
156,046
106,743
(55,179)
(1,062,098)
Non-Cash investing and financing activities
The Group issued shares for the capital restructure transaction and converted debt to equity as described in Note 16. There were no
other non-cash investing and financing activities during the year.
NOTE 10: RESTRICTED CASH
Restricted cash
NOTE 11: TRADE AND OTHER RECEIVABLES
CURRENT
Accounts receivables
Other receivables
2019
US$
28,223
2019
US$
16,538
122,346
138,884
2018
US$
137,278
2018
US$
33,788
44,267
78,055
All amounts are short-term. The net carrying value of trade and other receivables is considered a reasonable approximation of fair
value. The Group’s exposure to the risks associated with trade and other receivables are disclosed in Note 19.
NOTE 12: TRADE AND OTHER PAYABLES
CURRENT
Trade payables
Accrued expenses
Employee payables
2019
US$
65,099
485,444
185,491
736,034
2018
US$
38,493
95,024
44,214
177,731
All amounts are short-term. The carrying values of trade payables and other payables are considered to approximate fair value. The
Group’s exposure to the risks associated with trade and other payables are disclosed in Note 19.
43
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 13: EMPLOYEE PROVISIONS
CURRENT
Annual leave
NOTE 14: CONTRACT LIABILITY
Opening Balance
Payments received in advance
Transfer to Revenue
Contract liability
NOTE 15: ISSUED CAPITAL
a) Share Capital
Fully paid ordinary shares
2019
US$
93,577
2019
US$
106,325
852,695
(611,042)
347,978
2018
US$
3,296
2018
US$
-
479,731
(373,406)
106,325
2019
Shares No.
2018
Shares No.
2019
US$
2018
US$
76,658,758
110,028
7,967,290
304,314
b) Movement in Ordinary Capital
Date
No.
Opening balance as at 1 January 2019 (i)
Issue of shares in AppsVillage Ltd (Israel) (ii)
Less: adjustment for predecessor accounting (i)
Issue of shares upon conversion of loans held in the
AppsVillage Ltd (Israel) by third parties(iii)
Issue of shares – initial public offering
Issue of shares upon conversion of loans held in the
Company
Existing shares of AppsVillage Australia Limited (iv)
Issue of shares in relation to capital raising via public
offer
Costs of capital raising
Issue of 5,000,000 Lead Manager Options (refer to Note
17)
Closing balance at 31 December 2019
26 August 2019
26 August 2019
110,028
19,950,686
(110,028)
26 August 2019
10,910,905
27 August 2019
25,000,000
27 August 2019
3,923,198
27 August 2019
16 December 2019
6,875,001
9,998,968
-
-
-
-
76,658,758
Unit Price
US$
n/a
n/a
n/a
n/a
0.1353
0.1353
0.1353
0.1722
-
-
Total
US$
304,314
-
-
2,023,577
3,401,911
530,674
929,952
1,721,813
(581,741)
(363,210)
7,967,290
(i) The application of continuation accounting for the acquisition and consolidation of common shareholders entity AppsVillage Ltd (Israel) required
the disclosure of AppsVillage Ltd (Israel) shares on issue as at 31 December 2018 as a comparative.
(ii) The Company issued 19,950,686 fully paid ordinary shares to AppsVillage Ltd (Israel), refer to Note 2 for further details.
(iii) The issue of 10,910,905 ordinary shares on conversion of US$2,023,577 mandatorily convertible converting loans in AppsVillage Australia.
(iv) A financing cost of US $ 929,952 has been recognised for the value of 6,875,000 shares of AppsVillage Australia post 31 December 2018 prior to the
acquisition date to the founders of the company. The share is valued at AUD$0.20 per share which is the IPO offer price.
b)Movement in Ordinary Capital
Date
No.
Opening balance as at 1 January 2018
Movement during the year (i)
Closing balance at 31 December 2018
(i) No movement on share capital during 2018 financial year.
110,028
-
110,028
Unit Price
US$
Total
US$
304,314
-
304,314
44
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 15: ISSUED CAPITAL (continued)
a)
Capital Management
Due to the nature of the Group’s activities, the Group does not have ready access to credit facilities, with the primary source of funding
being equity raisings. Therefore, the focus of the Group’s capital risk management is the current working capital position against the
requirements of the Group to meet research and development programs and corporate overheads. The Group’s strategy is to ensure
appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raising as
required. Any surplus funds are invested with major financial institutions.
NOTE 16: RESERVES
a)
Share Based Payment Reserve
37,049,314 (31 December 2018: 29,581) options on issue
b) Movement in Share Based Payment Reserve
Opening balance as at 1 January 2018
Issue of 29,581 options (Note 17)
Closing balance as at 31 December 2018
Expensed in the statement of profit or loss and other comprehensive income
Issue of 2,000,000 warrants (Note 17)
Issue of 750,000 options (Note 17)
Issue of 3,049,314 options (Note 17)
Recognised in equity
Issue of 5,000,000 Broker Options (Note 17)
Closing balance as at 31 December 2019
c)
Foreign currency translation Reserve
Foreign exchange reserve closing balance
2019
US$
951,397
2019
US$
160,343
2018
US$
298,258
2019
US$
-
298,258
298,258
131,499
54,497
103,934
363,210
951,398
2018
US$
-
The foreign currency translation reserve records exchange differences arising on translation from functional currency to presentation
currency.
d)
Predecessor Accounting Reserve
Predecessor accounting reserve closing balance
2019
US$
(159,202)
2018
US$
-
The reserve arises from the capital reorganisation and records the net liabilities of AppsVillage Australia Limited as at the acquisition
date of 26 August 2019. Refer to Note 2.
45
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 17: SHARE BASED PAYMENTS
During the year ended 31 December 2019, the Company recorded the following share-based payments:
•
•
•
•
•
The issue of 5,000,000 options with an exercise price of AUD$0.30 and a life of 3 years to the Lead Manager (“Broker
Options”).
The issue of 2,000,000 warrants with an exercise price of AUD $0.30 and a life of 2.5 years to certain past shareholders
of AppsVillage.
The issue of 750,000 options with an exercise price of AUD $0.30 and a life of 3 years to the Directors (“Directors
Options”).
The issue of 3,049,314 options exercisable at AUD $0.039 to the vendors of AppsVillage Israel to cover the existing
options in AppsVillage Israel prior to the acquisition date.
The issue of 26,250,000 performance options with an exercise price of AUD$0.30 and a life of three years which are
subject to:
o
Tranche A Performance Options: will vest and become exercisable upon the Company achieving at least one
of the Customer Collections or ACV revenues of at least AUD $2,500,000 from sales of products and services
based on the Company’s technology, for any 12-month period after Admission and before the Performance
Expiry Date.
Tranche B Performance Options: will vest and become exercisable upon the Company achieving at least one
of customer collections or ACV revenues of at least AUD $5,000,000 from total sale of products and services
that are based on the Company’s technology, for any 12-month period after Admission and before the
Performance Expiry Date; and
Tranche C Performance Options: will vest and become exercisable upon the Company achieving at least one
Customer Collections or ACV revenues of at least AUD$10,000,000 from total sales of products based and
services that are based on the Company’s technology, for any 12-month period after Admission and before
the Performance Expiry Date.
o
o
Fair Value
Fair value is independently determined using a Black-Scholes option pricing model that takes into account the effective exercise price,
the terms of the option, the share price at grant date and expected price volatility of the underlying share value. This valuation
technique also applies to the Broker options as the value of the service performed could not be reliably determined. The Black Scholes
inputs and valuations were as follows:
Options
Number of options
Grant date
Issue date
Exercise price AUD $
Expected volatility
Implied option life
Expected dividend yield
Risk free rate
Valuation per option AUD $
Exchange rate
Valuation per option USD $
Total valuation USD $
Broker Options
Warrants
Directors Options
Performance Options
5,000,000
8 August 2019
27 August 2019
$0.30
100%
3 years from date of the
official quotation to
ASX
Nil
0.69%
$0.1074
0.6763
$0.0726
$363,210
2,000,000
8 August 2019
27 August 2019
$0.30
100%
2.5 years from date of
the official quotation
to ASX
Nil
0.69%
$0.0972
0.6763
$0.0657
$131,499
750,000
8 August 2019
27 August 2019
$0.30
100%
3 years from date of
the official quotation
to ASX
Nil
0.69%
$0.1074
0.6763
$0.0726
$54,497
26,250,000
8 August 2019
27 August 2019
$0.20
100%
3 years from date of
the official quotation
to ASX
Nil
0.69%
$0.1235
0.6763
$0.0837
$3,241,960
All options and warrants except for the performance options vest immediately.
46
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 17: SHARE BASED PAYMENTS (CONTINUED)
Share Based Payments expense
Non-cash share-based payment expense for the full year is comprised as follows:
Issue of 2,000,000 warrants
Issue of 750,000 options
Issue of 3,049,314 options (i)
Total expense recognised in profit or loss
Issue of 5,000,000 Broker Options
Total expense recognised in equity
Total share-based payments expense
2019
US$
131,499
54,497
103,934
289,930
363,209
363,209
653,139
2018
US$
-
-
298,258
298,258
-
-
298,258
(i) The issue of 3,049,314 options to cover the existing options in AppsVillage Israel prior to the acquisition date.
Performance Options/Rights
Performance Options – Tranche A
Performance Options – Tranche B
Performance Options – Tranche C
Total
Fair value of rights granted
Number of
Options
8,750,000
8,750,000
8,750,000
26,250,000
Expense
recognised $
-
-
-
-
A performance options plan (PROP) was established for the Chief Executive Officer (director), Chief Technology Officer (director) and
other certain key employees. The performance rights were issued on 27 August 2019. The performance rights issued to the CEO and
certain key employees pursuant to the PROP vest based on the achievement of various performance hurdles. The performance rights
have been granted to eligible participants as defined under the Company’s performance rights and option plan. In order to remain an
eligible participant, the employee and director must remain in services to the Group or the right will lapse and not vest.
The performance hurdles for the performance rights and options are based on 3 separate targets relating to the Company’s revenue
targets.
•
•
•
Tranche A Performance Options: will vest and become exercisable upon the Company achieving at least one of the
Customer Collections or ACV revenues of at least AUD $2,500,000 from sales of products and services based on the
Company’s technology, for any 12-month period after Admission and before the Performance Expiry Date.
Tranche B Performance Options: will vest and become exercisable upon the Company achieving at least one of customer
collections or ACV revenues of at least AUD $5,000,000 from total sale of products and services that are based on the
Company’s technology, for any 12-month period after Admission and before the Performance Expiry Date; and
Tranche C Performance Options: will vest and become exercisable upon the Company achieving at least one Customer
Collections or ACV revenues of at least $10,000,000 from total sales of products based and services that are based on
the Company’s technology, for any 12-month period after Admission and before the Performance Expiry Date.
The performance rights will vest on the date the milestone relating to that performance right has been satisfied. In total 26,250,000
performance rights were issued to the CEO and employees. The fair value of the performance rights has not been deemed as the
performance rights are based on non-market conditions. The directors of the Company have deemed the likelihood of the non-market
conditions being achieved as less than likely for Tranche A, Tranche B and Tranche C accordingly, no fair value assessment has been
made in relation to these Tranches.
47
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 18: OPERATING SEGMENTS
Segment Information
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors
(the chief operating decision makers) in assessing performance and in determining the allocation of resources. The Group’s sole
operating segment is consistent with the presentation of these consolidated financial statements.
NOTE 19: FINANCIAL INSTRUMENTS
a)
Capital management
The Group’s objective when managing capital is to safeguard its ability to continue as a going concern so that it can continue to provide
returns for shareholders and benefits to other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid, return capital to shareholders,
issue new shares or sell assets to reduce debt.
Given the nature of the business, the Group monitors capital on the basis of current business operations and cash flow requirements.
There were no changes in the Group’s approach to capital management during the year.
b)
Categories of financial instruments
Financial Assets
Cash and cash equivalents
Restricted cash
Trade and other receivables
Financial liabilities
Trade and other payables
2019
US$
2,662,198
28,223
138,884
2,829,305
250,590
250,590
2018
US$
453,655
137,278
78,055
668,988
177,731
177,731
The fair value of the above financial instruments approximates their carrying values.
c)
Financial risk management policies
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes
the Group’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative
information in respect of those risks is presented throughout these financial statements.
The board has overall responsibility to the determination of the Group’s risk management objectives and policies and, whilst retaining
ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective
implementation of the objectives and policies to the Group’s finance function. The Group’s risk management policies and objectives
are therefore designed to minimise the potential impacts of those risks on the Group where such impacts mat be material. The board
receives financial reports through which it reviews the effectiveness of the processes put in place and the appropriateness of the
objectives and policies it sets. The overall objective of the board is to set policies that see to reduce risk as far as possible without
unduly affecting the Group’s competitiveness and flexibility.
d) Market risk
Market risk for the Group arises from the use of interest-bearing financial instruments. It is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes in interest rate (see (e) below).
48
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 19: FINANCIAL INSTRUMENTS (CONTNUED)
e)
Interest rate risk management
The following table illustrates sensitivities to the Group’s exposures to changes in interest rates. The table indicates the impact on how
profit and equity values reported at reporting date would have been affected by changes in the relevant risk variable that management
considers to be reasonably possible. These sensitivities assume that the movement in a particular variable is independent of other
variables.
Floating
Interest
Rate
Non-interest
bearing
2019
Total
Floating
Interest
Rate
Non-interest
bearing
2018
Total
US$
US$
US$
US$
US$
US$
Financial assets
- Within one year
Cash and cash equivalents
2,662,198
Restricted cash
28,223
-
-
2,662,198
453,655
28,223
137,278
-
-
453,655
137,278
Trade and other receivables
-
138,884
138,884
-
78,055
78,055
Total financial assets
2,690,421
138,884
2,829,305
590,933
78,055
668,988
I Interest rate
0% to 1.5%
0% to 1.5%
Financial Liabilities
- Within one year
Trade and other Payables
Total financial liabilities
Interest rate
Net financial
assets/liabilities
Year ended 31 December 2019
+/-1% in interest rates
Year ended 31 December 2018
+/-1% in interest rates
f)
Credit risk
-
-
250,590
250,590
250,590
250,590
-
-
82,707
82,707
82,707
82,707
2,690,421
(111,703)
2,578,718
590,933
(4,652)
586,281
Movement in Profit
US$
Movement in Equity
US$
26,622
4,537
26,622
4,537
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The
Group has adopted a policy of dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a
means of mitigating the risk of financial loss from defaults. The Group only transacts with entities that are rated the equivalent of
investment grade and above. This information is supplied by independent rating agencies where available and, if not available, the
Group uses other publicly available information and its own trading records to rates its major customers. The Group’s exposure and
the credit ratings of its counterparties are continuously monitored, and the aggregate value of transactions concluded is spread
amongst approved counterparties.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-
rating agencies.
49
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 19: FINANCIAL INSTRUMENTS (CONTNUED)
g)
Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its
obligations related to financial liabilities. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always
have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Group’s reputation.
The Group manages liquidity risk by maintaining adequate reserves by continuously monitoring forecast and actual cash flows.
The following are the contractual maturities of financial liabilities based on the actual rates at the reporting date excluding interest
payments:
2019
Trade and other
payables
2018
Trade and other
payables
Interest
rate
Less than 6
months
US$
6-12
months
US$
1-2
years
US$
2-5
years
US$
Over 5
years
US$
Total
contractual
cash flows
US$
Carrying
amount
US$
-
-
250,590
250,590
-
-
-
-
-
-
-
-
250,590
250,590
250,590
250,590
Interest
rate
Less than 6
months
US$
6-12
months
US$
1-2
years
US$
2-5
years
US$
Over 5
years
US$
Total
contractual
cash flows
US$
Carrying
amount
US$
-
-
82,707
82,707
-
-
-
-
-
-
-
-
82,707
82,707
82,707
82,707
h) Net fair value of financial assets and liabilities
Fair value estimation
Due to the short-term nature of the receivables and payables, the carrying value approximates fair value.
i)
Foreign currency risk
The currency risk is that risk that the value of financial instruments will fluctuate due to change in foreign exchange rates. Currency risk
arises when future commercial transactions and recognised assets and liabilities
are denominated in a currency that is not the Company’s function currency. The Company is exposed to foreign exchange risk arising
from various currency exposures primarily with respect to the US Dollar (the functional currency of the subsidiary company), the New
Israeli Shekel, the Australian Dollar (functional currency of the parent company). No sensitivity analysis is disclosed as the balances in
foreign currency are immaterial.
50
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 20: PARENT ENTITY FINANCIAL INFORMATION
The following information of the legal parent AppsVillage Australia Limited has been prepared in accordance with Australian Accounting
Standards and the accounting policies as outlined in Note 1.
a)
Financial Position of AppsVillage Australia Limited
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
NET ASSETS
SHAREHOLDERS’ EQUITY
Issued capital
Reserves
Accumulated losses
SHAREHOLDERS’ EQUITY
b)
Statement of profit or loss and other comprehensive
income
Loss for the year
Other comprehensive income
Total comprehensive loss
2019
US$
1,565,200
-
1,565,200
96,632
-
96,632
1,661,832
7,804,186
547,766
(6,690,120)
1,661,832
(6,690,120)
157,729
(6,532,391)
2018
US$
1
-
1
-
-
-
1
1
-
-
1
-
-
-
During 2019, AppsVillage Australia Limited became the parent entity as part of a capital reorganisation. Refer to Note 2 for further
details.
c)
Guarantees entered into by AppsVillage Australia Ltd for the debts of its subsidiary
There are no guarantees entered into by AppsVillage Ltd.
d)
Contingent liabilities of AppsVillage Australia Ltd
There were no contingent liabilities as at 31 December 2019 (2018: nil).
e)
Commitments by AppsVillage Australia Ltd
There were no commitments as at 31 December 2019 (2018: nil).
NOTE 21: CONTROLLED ENTITIES
The ultimate legal parent entity of the Group is AppsVillage Australia Ltd, incorporated and domiciled in Australia. The consolidated
financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting
policies described in Note 1.
Controlled entity
Country of incorporation
Percentage owned
2019
2018
Parent entity
AppsVillage Australia Limited
Australia
Subsidiaries of AppsVillage Australia Limited
AppsVillage Ltd
Israel
The proportion of ownership interest is equal to the proportion of voting power held.
51
100%
100%
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 22: COMMITMENTS
There are no material commitments at 31 December 2019 (31 December 2018:Nil).
NOTE 23: CONTINGENT LIABILITIES
The Group has no known contingent liabilities as at 31 December 2019 (31 December 2018:Nil).
NOTE 24: EVENTS AFTER THE REPORTING PERIOD
Major Business Developments:
•
•
•
AppsVillage signed an agreement with a leading B2B credit risk analytics company Credit Risk Community, Inc. to integrate
its credit risk to integrate its credit risk analysis technology into the AppsVillage Capital Platform.
AppsVillage has integrated an artificial intelligence algorithm into its app development software.
Following COVID-19 situation, the Company has setup an Emergency Micro Loan program to assist SMBs with their immediate
cashflow needs to deal with the impacts of the situation.
Also on 31 January 2020, the World Health Organisation (WHO) announced a global health emergency because of a new strain of
coronavirus originating in Wuhan, China (COVID-19 outbreak) and the risks to the international community as the virus spreads globally
beyond its point of origin. Because of the rapid increase in exposure globally, on 11 March 2020, the WHO classified the COVID-19
outbreak as a pandemic.
The full impact of the COVID-19 outbreak continues to evolve at the date of this report. The Company is therefore uncertain as to the
full impact that the pandemic will have on its financial condition, liquidity, and future results of operations during 2020.
While offering unique opportunities for AppsVillage, COVID-19 also represents significant challenges for all companies globally and
AppsVillage is not different. We continue to focus on our strategy of expanding the Company’s operations and have implemented
measures to maintain low operational expenditure and mitigate the impact of COVID-19 on our activities.
Although the Company cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic
continues, it may have a material adverse effect on the Company’s results of future operations, financial position, and liquidity in fiscal
year 2020.
The Company recently announced that following the global situation, the Company has setup and Emergency Micro Loan program to
assist SMBs with their immediate cashflow needs to deal with the impacts of COVID-19 on their operations. Eligible businesses on the
AppsVillage platform will be able to access loans of up to $10,000 within 24 hours for an immediate relief of Coronavirus effect on
their business
There were no other material events after the reporting period other than the above.
NOTE 25: APPROVAL OF FINANCIAL STATEMENTS
The financial statements were approved by the board of directors and authorised for issue 31 March 2020.
The directors are unaware of any other significant event or circumstance that has arisen since 31 December 2019 that has significantly
affected the Group’s operations, results or state of affairs, or may do so in future years other than those disclosed above.
52
AppsVillage Australia Limited
Notes to the Consolidated Financial Statements (continued)
For the Year Ended 31 December 2019
NOTE 26: APPLICATION OF NEW AND REVISED AUSTRALIAN ACCOUNTING STANDARDS
New, revised or amending Accounting Standards and Interpretations issued and adopted
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.
Any new of amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The following Accounting Standards and Interpretations are most relevant to the entity:
AASB 16 Leases
The entity has adopted AASB 16 from 1 January 2019. Except for short-term leases and leases of low-value assets, right-of-use assets
and corresponding lease liabilities are recognised in the statement of financial position. A depreciation charge for the right-of-use
assets (included in operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). For
classification within the statement of cash flows, the interest portion is disclosed in operating activities and the principal portion of the
lease payments are separately disclosed in financing activities.
The adoption of AASB 16 did not result in a material impact on the group as all the leases where the group is a lessee met the
exemption for low-value or short-term leases.
53
AppsVillage Australia Limited
Directors’ Declaration
For the Year Ended 31 December 2019
In the Director’s opinion:
1) The consolidated financial statements and notes set out on pages 28 to 56 are in accordance with the Corporations Act 2001,
including:
a)
complying with Australian Accounting Standards, Corporations Regulations 2001 and other mandatory professional
reporting requirements, noting the matters documented in Note 1(a);
b) giving a true and fair view, the consolidated entity’s financial position as at 31 December 2019 and of its performance
for the year ended on that date; and
2) There are reasonable grounds to believe that the Company will be able to pay its debts ad and when they become due and
payable.
3) This declaration has been made after receiving the declaration required to be made to the directors in accordance with
Section 295A of the Corporations Act 2001 for the financial year ended 31 December 2019.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Directors by:
Max Bluvband
Chief Executive Officer
Tel Aviv, 31 March 2020
54
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of AppsVillage Australia Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of AppsVillage Australia Limited (the Company) and its
subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31
December 2019, the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
then ended, and notes to the financial report, including a summary of significant accounting policies
and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 31 December 2019 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1(c) in the financial report which describes the events and/or conditions
which give rise to the existence of a material uncertainty that may cast significant doubt about the
group’s ability to continue as a going concern and therefore the group may be unable to realise its
assets and discharge its liabilities in the normal course of business. Our opinion is not modified in
respect of this matter.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Accounting for capital reorganisation
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 1 to the financial report, on 26
August 2019, AppsVillage Australia Limited
acquired 100% of the issued capital of AppsVillage
Ltd by issuing the shareholders of AppsVillage Ltd
fully paid ordinary shares in AppsVillage Australia
Limited. Appsvillage Australia Limited has been
incorporated to effect the Australian listing of
AppsVillage Ltd under a capital reorganisation.
The accounting of this capital reorganisation is a
key audit matter due to the accounting complexity
of the arrangement as there is limited guidance in
Australian accounting standards relating to these
types of transactions. There is a risk that the
financial report is not presented and disclosed in
accordance with the accounting policy adopted for
capital reorganisations by the Group.
Refer to Note 1(b),Note 1(x) and Note 2 to the
financial report for a description of the accounting
policy and judgements applied to this transaction.
Our procedures included, but were not limited
to:
•
•
•
Obtaining an understanding of the relevant
agreements in line with management’s
assessment of the transaction and the
accounting policies adopted to reflect the
capital reorganisation;
Involving our internal technical accounting
specialists to evaluate the appropriateness
of the use of the continuation accounting
as it was applied to this transaction; and
Assessing the adequacy of the Group’s
disclosures in respect of the accounting for
this capital reorganisation in Note 1(b),
Note 1(x) and Note 2 to the financial
report.
Accounting for share-based payments
Key audit matter
How the matter was addressed in our audit
During the financial year ended 31 December
2019, the Group issued equity instruments in the
form of shares, options, warrants and
performance options, to eligible directors,
employees and other consultants, which have
been accounted for as share-based payments, as
detailed in Note 17 to the financial report.
Refer to Note 1(u) and Note 1(x) in the financial
report for a description of the accounting policy
and significant judgements applied to these
arrangements.
Share-based payments are a complex accounting
area and due to the complex and judgemental
estimates used in determining the fair value of
share-based payments. As a result, this is
considered a key audit matter.
Our procedures included, but were not limited
to:
•
•
•
•
•
•
Reviewing the relevant agreements to
obtain an understanding of the contractual
nature and terms and conditions of the
share-based payment arrangements;
Reviewing management’s determination of
the fair value of the share-based payments
granted, considering the appropriateness of
the valuation models used and assessing
the valuation input;
Evaluating the independence, competence
and objectivity of the managements’
expert to assess the reasonableness of
management’s valuation inputs;
Assessing management’s determination of
achieving the non-market vesting
conditions attached to the performance
options issued;
Assessing the allocation of the share-based
payment expense over management’s
expected vesting period; and
Assessing the adequacy of the related
disclosures in Note 1(u), Note 1(x) and Note
17 in the financial report.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 31 December 2019, but does not include
the financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Other Matter
The financial report of the Group for the year ended 31 December 2018 was audited by another auditor
who expressed an unmodified opinion on that financial report on 26 May 2019.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 12 to 23 of the directors’ report for the
year ended 31 December 2019.
In our opinion, the Remuneration Report of AppsVillage Australia Limited, for the year ended 31
December 2019, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Dean Just
Director
Perth, 31 March 2020
ADDITIONAL ASX INFORMATION
The shareholder information set out below was applicable as 19 March 2020.
As at 19 March 2020 there were 867 holders of Ordinary Fully Paid Shares.
VOTING RIGHTS
The voting rights of the ordinary shares are as follows:
Subject to any rights or restrictions for the time being attached to any shares or class of shares of the Company, each member of the
Company is entitled to receive notice of, attend and vote at a general meeting. Resolutions of members will be decided by a show of
hands unless a poll is demanded. On a show of hands each eligible voter present has one vote. However, where a person present at a
general meeting represents personally or by proxy, attorney or representation more than one member, on a show of hands the
person is entitled to one vote only despite the number of members the person represents.
On a poll each eligible member has one vote for each fully paid share held.
There are no voting rights attached to any of the options and deferred securities that the Company currently has on issue. Upon
exercise of the options, the shares issued will have the same voting rights as existing ordinary shares.
TWENTY (20) LARGEST SHAREHOLDERS
The names of the twenty largest holders of each class of listed securities are listed below:
Ordinary Full Paid Shares
Holder Name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR MOSHE COHEN
VICTORIA LINDENBAUM
MR SHAHAR HAJDU &
MS RONI HAJDU
MR MAX EITAN BLUVBAND
GNAT PTY LTD
ARMAND GOLDBERG
MR TAMIR ELIEZER KREMENER
TRUE COLOUR ADVERTISEMENT PTY LTD
SCOPUS VENTURES FUND I LP
ILIYA SOFKOV
MR DAN GOTLIEB
YULIA UVAROVA
MR YORAM LEVY &
MS RUTHIE LEVY
NADAV DANIEL
NETWEALTH INVESTMENTS LIMITED
MARTIN SHUSTER
MR JOSEPH YAVIN
59
Holding
10,405,130
5,447,006
4,021,644
3,092,506
3,092,506
2,926,251
2,338,966
2,202,527
2,154,000
2,014,641
1,306,964
1,166,493
1,125,000
% IC
13.57%
7.14%
5.25%
4.03%
4.03%
3.82%
3.05%
2.87%
2.81%
2.63%
1.70%
1.52%
1.47%
1,026,701
1.34%
1,014,961
955,000
1.32%
1.25%
857,812
1.12%
797,875
1.04%
MR DANIEL ESTEBAN GROSZ &
MRS CLAUDIA VIVIANA GROSZ
MR JOSEPH YAVIN
SABRE POWER SYSTEMS PTY LTD
MR BARAK HARPAZ
TOTAL
SUBSTANTIAL HOLDERS
686,288
0.90%
686,288
650,000
611,644
48,610,203
0.90%
0.85%
0.80%
63.41
The names of the substantial shareholders disclosed to the Company as substantial shareholders as at 19 March 2020 are:
Name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR MOSHE COHEN
VICTORIA LINDENBAUM
DISTRIBUTION OF EQUITY SECURITIES
Ordinary Fully Paid Shares
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Totals
No of Shares
Held
% of Issued
Capital
10,405,130
5,447,006
4,021,644
13.57%
7.14%
5.25%
Holders
Total Units
% Issued Share Capital
18
179
193
392
83
865
7,681
547,698
1,661,417
12,988,162
61,453,800
76,658,758
0.01%
0.71%
2.17%
16.94%
80.17%
100.00%
Unmarketable Parcels – 150 Holders with a total of 327,866 shares, based on the last trading price of $0.13 on 18 March 2020.
RESTRICTED SECURITIES
As at 19 March 2020, the following shares are subject to escrow:
5,596,303
706,169
4,021,256
15,277,548
2,639,248
5,750,000
26,250,000
2,000,000
410,066
Ordinary Fully Paid Shares voluntary escrowed until 14 August 2020
Ordinary Fully Paid Shares voluntary escrowed until 14 September 2020
Ordinary Fully Paid Shares escrowed 12 months from date of issue
Ordinary Fully Paid Shares escrowed 24 months from date of issue
Unlisted Options Expiring 5 years from quotation @ NIS0.01 escrowed 24 months from quotation
Unlisted Options Expiring 3 years from date of issue @ $0.30 escrowed 24 months from quotation
Unlisted Performance Options escrowed 24 months from quotation
Warrants Expiring 30 months from date of issue $0.30 escrowed 24 months from quotation
Unlisted Options Expiring 5 years from quotation @ NIS0.01 escrowed 12 months from date of issue
UNQUOTED SECURITIES
As at 19 March 2020, the following unquoted securities are on issue:
Unlisted Options Expiring 5 years from quotation @ NIS0.01 – 4 Holders
Holders with more than 20%
60
Holder Name
MR MAX EITAN BLUVBAND
MR SHAHAR HAJDU & MS RONI HAJDU
Unlisted Options Expiring 3 years from date of issue @ $0.30 – 19 Holders
Holders with more than 20%
Holder Name
GNAT PTY LTD
Unlisted Performance Options escrowed 24 months from quotation – 5 Holders
Holders with more than 20%
Holder Name
MR MAX EITAN BLUVBAND
MR SHAHAR HAJDU & MS RONI HAJDU
Warrants Expiring 30 months from date of issue $0.30 – 7 Holders
Holders with more than 20%
Holder Name
ARMAND GOLDBERG & HERTZEL ROSENBLUM
VICTORIA LINDENBAUM
Holding
1,108,457
1,108,457
% IC
42%
42%
Holding
2,578,500
% IC
44.84%
Holding
9,187,500
9,187,500
% IC
35%
35%
Holding
% IC
600,000
600,000
30%
30%
Unlisted Options Expiring 5 years from quotation @ NIS0.01 escrowed 12 months from date of issue – 4 Holders
Holders with more than 20%
Holder Name
NEXTAGE CONSULTING SERVICES (2008) LTD
ILAY RON
ON-MARKET BUY BACK
There is currently no on-market buyback program.
ASX LISTING RULE 4.10.19
Holding
193,282
114,526
% IC
47.13%
27.93%
The Company has used its cash and assets in a form readily convertible to cash that it had at the time of listing of the Company’s
securities to quotation in a way consistent with its business objectives.
61